Swarms SSI Fun Project Launch Turns Into Investor Scam Dispute

Swarms SSI Fun Project Launch Sparks Accusations of Investor Deception

The Swarms SSI Fun Project Launch faces disputes due to explosive accusations against former DAO leader SongShu through the official X account. The fraud claims are market manipulation, investor deception, and misuse of a launcher called SSI Fun Project. The controversy has also dragged in the developer, Kye, sparking many questions on investor safety in AI-driven projects.

Swarms Officially Accuses Former DAO Leader

On September 10, 2025, the official X account directly accused Ex-leader SongShu, who was once a DAO, of engaging in misconduct. According to the post, SongShu was allegedly involved in the manipulation of the market and defrauding investors during the launch.

The foundation alleged that SongShu purged other DAO members from internal chat groups and that he used this to centralize control. Swarms SSI Fun Project Launch further alleged that SongShu had sole authority on the project, a launcher tool, which became the vehicle for misleading investors.

While the foundation admitted that it made resources available for the SSI Fun Project launch, it has now refused to take responsibility or offer compensation for investor losses, adding more fuel to the dispute.

Source: Official Swarms X

SongShu’s Side of the Story

In response to the allegations, Former Swarms AI Foundation DAO SongShu defended his action and denied personal misuse of funds. He explained that when the market value dropped to about $30 million, the funds went straight to the foundation's account. This, he argued, establishes the fact that there was no diversion of money for personal gain.

To strengthen his defense, SongShu revealed that he had personally invested between $2 - $3 million into the Swarms SSI Fun Project Launch. Despite this significant commitment, he stated that he remains at a loss, underscoring his position.

He didn’t sell their holdings and continues to actively support the ecosystem by participating in investments. SongShu also described the alleged scam mentioned by developer Kyeass as baseless, noting that Kye has repeatedly launched new projects and tried to collect fees for new platforms while presenting himself as a founder. 

Developer Kye Draws Attention

The controversy took another turn when Swarms developer Kye was accused of intimidating the SSI Fun team. Reports claim that Kye threatened them and demanded a 10% handling fee.

This allegation has amplified concerns about internal power struggles within the ecosystem. A conflict between a former DAO leader and the foundation has now grown into a wider debate over today's fraud in crypto projects.

Investor Impact and Market Sentiment

The allegations have created a climate of fear and distrust among investors. The Swarms market price declined 6.2%, now at $0.0217with a market capitalization of $21.72 million and trading volume $6.14 million. This news mess has further weakened community confidence.

Source: CoinMarketCap

For a number of investors, particularly in emerging markets such as India, the situation is a reminder of the risks related to DAO-led and AI-driven blockchain projects. Governance issues, lack of oversight, and disagreements over leadership can easily destroy value and hurt reputation. Industry observers point out that unless these accusations are clarified, its long-term credibility may suffer irreparable damage.

Conclusion

The SSI Fun Project Launch controversy brings up the fragile nature of deFi in AI and blockchain projects. Moving forward, the platform is going to need to adopt better governance mechanisms to rebuild trust, or it risks being remembered more for its internal conflicts than its innovation.