Yooldo blames market maker for ESPORTS token’s 93% crash

Yooldo Games released a statement attributing the collapse of ESPORTS Token on May 25 to the unauthorized selling of tokens by a partner market maker. This collapse wiped out more than $110 million in market capitalization for the token and has reignited the debate about how best to manage third-party liquidity providers in token projects.

The crash saw the price of ESPORT fall from approximately $0.70 to $0.05 in just a matter of hours — one of the largest single-token collapses of 2026. This incident highlights a fundamental vulnerability inherent to lower-cap cryptocurrencies: for projects that give out large allocations of tokens to external partners without enforceable protections for retail holders, when those partners act outside their agreed-upon terms, retail holders can incur catastrophic losses.

What Yooldo says happened

According to a post by Yooldo on its X account, the ESPORTS team “did not execute, coordinate, or instruct any market sell-offs intended to cause the price decline”. The team stated that it brought on outside OTC and market makers to assist with liquidity. Upon conducting an internal investigation, Yooldo discovered that one partner had acted contrary to the agreed-upon terms of the team with respect to the sales of tokens.

Official Statement Regarding the May 25 Market Event

We would like to share an update regarding the significant price decline that occurred on May 25.

First, we want to make it clear that this event was not initiated, directed, or intended by the ESPORTS team. We remain…

— Yooldo (@Yooldo_Games) July 2, 2026

Yooldo also stated that the majority of the sale activity appeared to be the result of tokens that had previously been allocated to that partner. However, the routing of the funds after the sale would be very difficult because they had moved through many wallets, counterparties, and exchanges.

As of the writing of this statement, Yooldo has cooperated with exchanges to complete an investigation and to mitigate any further damages and is undertaking recovery efforts which include providing new liquidity and onboarding new partners.

On-chain data tells a harsher story

The information provided by the blockchain data appears to be in complete contradiction to the statements made by Yooldo. Based on both EyeOnChain and Lookonchain’s data, around 43% of the total circulating supply of ESPORTS (approximately 197.8 million tokens) was sold within just hours after 60 million ESPORTS tokens were sent out from a project multisig wallet. The transactions tracked resulted in the conversion of these tokens into approximately 20,401 BNB (~$12.7 million to $13.7 million at the time).

According to EyeOnChain’s follow-up monitoring and reporting, sales of the ESPORTS token continued, even after the initial sale. The same wallet transferred another 35.13M ESPORTS for sale during the following 6 hours, and 22.73M ESPORTS had already been sold at that time for nearly 987,734 USDT. The remaining balance in that wallet was substantially higher than the amount that had already been sold, leading to a potential for more selling pressure on the market.

The continued selling pressure overwhelmed the liquidity of the market, causing the ESPORTS price to plummet. Additionally, well-known trader Ash Crypto, with over 2.1M followers on X, reported that ESPORTS fell over 93% in just one day, leading to $110M+ worth of market capitalization lost and approximately $4.72 million worth of long liquidations due to the severe decline in price. Ash Crypto added that “there is a speculation that the majority of the ESPORTS supply was controlled by the team,” framing it as a market allegation rather than a verified fact.

Questions about Yooldo’s corporate structure

Domestic online video game developer Catze Labs, led by CEO Shin Do-Heon, states that its English-language site lists Yooldo as “our flagship platform.” An October 2024 MetaMask post about Yooldo lists Shin Do-Heon as the author, and a large Yooldo investor told ChosunBiz that Yooldo is “CEO Shin.”

Catze Labs has reportedly stated that Yooldo is an independent international site on which Catze Labs merely provided development services under a contract. The company also stated that they have “absolutely nothing to do with the sharp drop in the ESPORTS token price, selling, price fluctuations, or suspicions of insider price rigging.”

A broader market problem

According to The Block, the ESPORTS incident occurred several weeks before Binance released its updated guidance regarding market makers in the form of a new version of the market maker guidance that was released in March 2026, including specifying behaviors such as inconsistent patterns into unlock schedules with regard to selling, pursing sell side orders exclusively through one of the exchanges, as well suppliers working with multiple exchanges for the same supplier product parcel dumps. Binance said projects should conduct “rigorous due diligence” on market-making partners and avoid profit-sharing or guaranteed-return arrangements.

The timing of this event provides several production examples to show all of the compliance issues that Binance highlighted in their guidance: Tokens concentrated into the hands of one outside party; liquidity very limited to handle a large exit from the token and a long period of time for the team to respond publicly to the negative result.

Yooldo announced they will announce both new gaming releases and their buyback program within the next week. And they have suggested that other founders work only with reputable and high-quality commercial partners in association with market makers. So the retail Investors who received losses and hope to recoup them have already received this message too late.