Morphware AI Scam Allegations Surface After $XMW Rug Pull Allegations

Background on Morphware AI and its ecosystem

Morphware AI was founded in 2024 by Kent Trabing, also known as Kenso Trabing. The project positioned itself as an AI infrastructure platform focused on crypto mining, energy partnerships, and large-scale hardware deployments.

The team claimed it would build a network of AI-powered mining infrastructure while forming partnerships with major brands and energy providers. Morphware operated primarily from Paraguay, a country known for its low-cost energy and growing interest in crypto mining operations.

The project’s ecosystem revolved around its native token, originally launched as MWT before later undergoing changes to its token structure. The token was promoted as part of a broader system that included mining expansion plans, treasury management, and potential stablecoin development.

Morphware AI scam allegations raised by former marketing lead

The Morphware AI scam allegations were raised by Venom, who stated he served as the project’s marketing lead beginning in December 2024. According to his thread, he initially joined as an investor before becoming responsible for several promotional campaigns.

Venom claimed the project’s public messaging often differed from internal discussions. He stated that several announcements presented as major partnerships were allegedly exaggerated or misrepresented.

One example cited in the thread involved claims about relationships with global brands such as Nike, Porsche, and Volkswagen. Venom said these connections were reportedly linked to a Paraguayan distributor rather than direct partnerships with the companies themselves.

The thread also described the project’s marketing campaigns, including “30 Days of Alpha” and the “08” narrative that suggested a major announcement tied to buyback activity.

Timeline of alleged issues within Morphware

Venom outlined a timeline of events that he described as warning signs during his involvement with the project. In December 2024, he joined the project as an investor and marketing contributor after becoming convinced by its AI infrastructure narrative.

In April 2025, the project launched the “30 Days of Alpha” marketing campaign. Venom said he resigned on the first day after noticing inconsistencies between internal discussions and public messaging.

By June 2025, he returned after discussions with the team and helped promote the “08” campaign. The narrative suggested that a deal had been signed for daily buybacks tied to mining revenue. According to Venom, the agreement later turned out to be a memorandum of understanding with a termination clause that allowed cancellation after 30 days.

The thread also referenced claims about potential UAE investment backing and a plan to deploy 30,000 mining units. Venom said the mining tender appeared to be publicly available rather than an exclusive agreement.

Treasury and token management concerns

Another part of the Morphware AI scam allegations focused on treasury management and token-related decisions.

Venom stated that the team publicly claimed to have raised around $7.8 million, while internal figures suggested the amount was closer to $5.8 million. Some of the funds were reportedly used to swap Ethereum for mining equipment orders that were later reduced or canceled.

He also described disagreements over additional fundraising plans, including a proposed $4 million land purchase. According to Venom, he advised against the move but said the proposal moved forward despite his concerns. The thread further claimed that the project later discussed launching a stablecoin tied to the Paraguayan guarani.

Claims of insider selling and on-chain activity

The Morphware AI scam allegations also include claims of insider selling by wallets allegedly linked to project founder Kent Trabing.

Venom stated that on-chain analysis showed certain wallets selling tokens during periods of increased market hype. He also claimed explanations for seed wallet activity changed over time.

According to the thread, these activities occurred while promotional campaigns were being conducted to increase community attention around the project.

Venom stated that he plans to provide screenshots, recordings, and other evidence to authorities as part of potential legal complaints.

Morphware AI Scam Allegations after migration to the $MW token

The controversy escalated further when the team announced a migration from $XMW to a new token called $MW.

According to investigators, the migration distribution heavily favored insiders. Reports claim that approximately 8.6 billion tokens were allocated to the team, while only about 1 billion tokens were assigned to the community.

Critics also pointed out that the migration contract allegedly included a function that allowed the owner to withdraw tokens from the contract. This raised concerns that the mechanism could potentially be used to drain funds sent by users during the migration process.

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