The launch of Plasma’s native token XPL has been turbulent. Within days of trading, the token dropped nearly 50% from its peak, sparking heated debates and widespread rumours.
Accusations ranged from insider selling to claims that Plasma’s team was connected with controversial projects, fuelling fear, uncertainty, and doubt (FUD) across the market.
Investors were left wondering whether this decline reflected deeper problems or simply the typical volatility of new tokens. In this article, we will walk through the sequence of events, the core allegations, and the official clarifications made by Plasma’s CEO, Paul Faecks.
What Happened to Plasma’s XPL?
When Plasma launched its mainnet beta on 25 September 2025, anticipation was high. The project aimed to position itself as a layer-1 blockchain dedicated to fast, low-cost stablecoin payments, and its native token, XPL, was central to this vision.
Like many new launches, the token’s price reacted strongly in the early days. It quickly climbed to an all-time high (ATH) of around $1.70 before crashing to just $0.90 in less than a week, marking a decline of more than 46%.
For newcomers to crypto, such rapid swings are not unusual. A newly listed token often experiences strong demand from traders and early supporters, which can push the price up quickly.
However, when early investors who bought at much lower prices begin to sell, the sudden increase in supply often causes sharp declines. This process is commonly referred to as “profit-taking.”
In XPL’s case, multiple factors compounded this effect. Social media platforms were flooded with claims that Plasma was secretly linked to Blast, a project notorious for its troubled history.
Blast had suffered from hacks, rug pulls, unstable token distribution, and poor transparency. Because of this, even an unproven connection to Blast created fear that Plasma could face similar issues.
At the same time, blockchain data showed large volumes of XPL moving from Plasma wallets to centralised exchanges such as Binance and Bitfinex.
More than 600 million tokens were tracked in just a few days, and some analysts suggested that Wintermute, a well-known market-making firm, was involved.
The idea that such a large amount of supply might have been released into the market intensified fears that the team itself was selling.
Adding to the unease, the tokenomics of XPL meant that 800 million tokens had been unlocked immediately at launch to fund liquidity, decentralised finance (DeFi) incentives, and exchange integrations.
While such allocations are standard in many projects, the timing, alongside rumours and heavy selling, created an impression that insiders were offloading tokens.
The combination of rumours, visible token transfers, and heavy selling created what traders call a “perfect storm.”
Even though some of the selling came from initial investors locking in 20x to 30x gains from the public sale, the perception was enough to cause panic. In crypto markets, perception often matters as much as facts.
Clarification from the CEO
With the community demanding answers, Plasma’s CEO and founder Paul Faecks issued a detailed public response. His clarifications addressed three main accusations: insider sales, alleged ties to Blast, and the supposed involvement of Wintermute.
First, on the issue of insider sales, Faecks was clear: “No team members have sold any XPL.” He explained that both investor and team tokens are locked for 3 years with a 1-year cliff.
In practical terms, this means that neither the development team nor early investors can access their tokens until at least late 2026, and thereafter tokens will only be gradually released.
This lock-up is designed to align the team’s incentives with the long-term success of the project and reassure investors that insiders are not dumping tokens on the market.
Second, Faecks responded to claims about Blast. Social media had portrayed Plasma’s team as “ex-Blast” developers. In his statement, Faecks clarified that out of approximately 50 team members, only 3 had previously worked at either Blast or Blur, another troubled project.
The majority of the team, he said, came from highly respected companies such as Google, Facebook, Temasek, Square, Goldman Sachs, and Nuvei. Labelling the team as “ex-Blast,” therefore, was misleading.
For beginners, it is important to understand that blockchain projects often hire talent from multiple backgrounds. The presence of a handful of employees from a failed project does not mean the new project is a continuation of the old one.
Third, Faecks addressed the rumours of a relationship with Wintermute. Some on-chain analysts had linked the token transfers to wallets associated with the firm, suggesting Plasma had engaged Wintermute for market-making.
Faecks categorically denied this, stating that Plasma had never contracted Wintermute for any services. He emphasised that the company had no special knowledge of Wintermute’s holdings and had the same information as the general public.
Faecks also took the opportunity to explain Plasma’s token distribution. Out of the total supply of 10 billion XPL tokens:
- 10% (1 billion) was sold to the public in July 2025.
- 40% (4 billion) was reserved for ecosystem and growth, with 800 million unlocked immediately at launch and the remaining 3.2 billion to be released gradually over 3 years.
- Around 2.5 billion tokens were allocated to the team, subject to a 3-year lock-up with a 1-year cliff.
- The rest of the supply was spread across other categories such as staking rewards and community incentives.
By laying out these details, the CEO attempted to show that the sudden price drop was the result of market dynamics, not insider activity.
Conclusion
The launch of Plasma’s XPL token demonstrates how quickly narratives can shape market behaviour.
Within days of its release, the token lost nearly half its value amid rumours of insider selling, alleged ties to controversial projects, and heavy token transfers.
For many investors, this reinforced the perception that something was wrong. Yet CEO Paul Faecks has strongly denied the claims, pointing to strict lock-ups on team and investor tokens, clarifying the backgrounds of staff, and rejecting any link to Wintermute.
For beginners in crypto, the XPL story is a lesson in how perception, rumours, and incomplete information can move prices as much as fundamentals.
Plasma still faces the task of proving its transparency and building trust with its community. Whether confidence returns will depend not only on future price performance but also on clear communication and consistent delivery of the project’s vision.