Traders seethe after Sony freezes memecoins on its new blockchain

Within hours of launching the Soneium blockchain on Tuesday, Sony is already mired in controversy after freezing multiple memecoins.

The move is costing users who invested in them thousands of dollars.

At around 4 am London time, users in the Soneium Discord, a messaging app, started reporting that they could no longer trade two recently-created memecoins called Aibo and Toro.

On Blockscout’s Soneium explorer, a site used for checking blockchain data, both tokens are listed as “Forbidden,” and no longer show any transaction data.

The problem appears to be the use of Sony’s copyrighted material in creating the memecoins.

Strange move

“Measures were put in place to safeguard the rights of IP holders,” a spokesperson for Sony Block Solutions Labs, the firm behind the Soneium blockchain, told DL News.

The move is strange because other blockchains have gone to great efforts to foster memecoins in the hope that one becomes a viral hit and brings more attention to the blockchain.

Sony, on the other hand, favours protecting its intellectual property.

“In the two cases where Sony’s IP was used without authorisation, swift action was necessary to uphold our mission of protecting creators’ rights,” the spokesperson said.

On other blockchains popular with memecoin traders, like Solana, users often appropriate copyrighted material in memecoins — that’s the whole point of memes.

Even if a copyright holder objects to the use, it can be difficult for them to shut down the coin through legal means due the decentralised nature of most blockchains and the anonymity of their users.

But Soneium bucks this trend. Its centralisation means its creators retain the ability to freeze any token they choose at any time.

Cat mascot

The Aibo memecoin, which traded at a market value of $2.7 million before it was frozen, is named after a series of robotic dogs designed and manufactured by Sony.

Toro, which references Toro Inoue, the unofficial cat mascot of Sony Interactive Entertainment, traded as high as $1.1 million.

Investors who bought the memecoins accused Soneium of “rugging” them in the blockchain’s Discord.

Rugging, or pulling the rug, is crypto term describing a situation where the creator of a token or project sells their stash, usually in a single transaction, crashing the token’s price for a quick profit at the expense of other investors.

The term is often used to refer to any action that crashes a token to zero, such as Soneium’s decision to freeze the Aibo and Toro memecoins.

Grace period

Soneium is Sony’s answer to the growing trend of corporations branching out into crypto.

It is an Ethereum layer 2, meaning that all transactions on the blockchain are bundled together and sent to the main Ethereum blockchain for settlement.

In a blog post announcing Soneium’s launch, Sony BSL said the project aims to foster creators’ creativity, protect content rights, and create fair profit-sharing mechanisms.

Even so, the crackdown on unauthorised IP use caught many users off guard.

In response, Sony BSL said it plans to implement a grace period for potential blacklisting decisions, during which developers will be warned, given clear reasoning, and provided an opportunity to make necessary adjustments before any action is taken.

Still, many DeFi diehards used to more open blockchains may be put off by Soneium’s approach.

“We do not foresee this issue impacting Soneium’s growth,” the spokesperson said.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.