Creating an illusion, promising to burn the remaining PEPE tokens in the future.
Author | Qin Xiaofeng
In the past two days, the Meme project PEPE has staged a “mysterious” market crash drama.
On the early morning of August 25th Beijing time, the PEPE team’s multi-signature address transferred more than 160,000 billion PEPE tokens (equivalent to about 16 million US dollars) to four centralized platforms (OKX, Binance, KuCoin, and Bybit exchanges) for sale, causing the price of PEPE to plummet by more than 25% that day, and it is currently maintaining at 0.00000087 USDT.
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According to CryptoNoddy’s monitoring, the reason for the massive sell-off is that the PEPE multi-signature wallet changed the threshold from 5/8 to 2/8, which means that only 2 private key holders need to sign the transaction to transfer the team’s assets.
The news caused an uproar in the community. However, it wasn’t until a full day of fermentation (August 26th) that the PEPE team finally responded. Odaily summarized the key points of the announcement: 3 former team members secretly deleted the multi-signature permission and sold the tokens, and the remaining tokens are currently safe and will be planned for future burning.
Former team members causing market crash?
The announcement stated that since its establishment, PEPE has been plagued by internal conflicts, where some members of the team have become bad actors due to self-conceit and greed. Previously, due to the inability to sign transactions, differences of opinion, and the inability to contact them for several weeks, these people hindered the team’s progress in using the multi-signature wallet for donations or token purchases – the multi-signature was set to require 3/4 signatories to approve. On August 25th, 3 former team members secretly returned, modified the multi-signature threshold, stole 60% of the tokens in the multi-signature wallet, which is 160,000 billion PEPE, and sent them to the trading platform for sale.
The announcement stated that the remaining 100,000 billion tokens in the multi-signature wallet are safe and inaccessible to former team members. The PEPE team stated that the future looks bright after resolving internal conflicts, and they are currently planning to use the remaining tokens to purchase the PEPE domain name, with the remaining tokens to be burned in the future.
However, this seemingly transparent announcement has triggered further doubts in the community.
MCVERSE founder McOne’s investigation found that there were 5 addresses that approved the multi-signature. “Definitely more than 3 people are involved. It looks like there are 5 signatories.” As shown below:
CryptoNoddy also confirmed this discovery and gave his speculation: “Unless each person controls two addresses. But this should be disclosed because these signatories are essentially the same.” Furthermore, he also found that after the announcement was released, the multi-signature address still retained the attacker’s signing permission – in other words, the attacker can still continue to withdraw funds, so the remaining 100,000 billion tokens are not safe at all.
Many community users expressed distrust of the PEPE announcement:
“It’s just a made-up story.”
“How do we know that you didn’t plan it from the beginning so that they could sell some PEPE and pocket the profits? The whole thing is suspicious, like a pre-set drama.”
“This is 100% nonsense. You spent so long releasing this thing?”
“Destroy the remaining tokens and let’s see if what you said is true.”
Finally, in the midst of community skepticism, the PEPE team transferred the remaining tokens to a new address: 0x9f5E46E4990dee30665b2e803BA134564D1e087F. At the same time, the PEPE team announced that the Telegram group was disabled, the group owner’s old Telegram account was hacked, and the group was taken over by hackers. Currently, PEPE is in the process of restoring access or creating new accounts; during this period, all official PEPE notifications will be published through the X platform account, and the new Telegram group link will also be shared through the X platform (Twitter) account.
The PEPE team did not respond to other core issues of concern to the community. First, regarding the tokens sold by former team members, whether they will be recovered and how they will be recovered, who will bear the losses of the PEPE community? Second, who controls the new address where the remaining assets are located, is the remaining multi-signature address controlled by one person or several individuals? Third, future plans, when will the remaining tokens be destroyed and issues related to token transparency.
Founder’s identity exposed, suspected insider trading
Since PEPE is a project created by an anonymous team, there has been no personal information about the three individuals involved in recent announcements. However, this dumping has angered the community, and some “insiders” have voluntarily revealed more information.
KOL LianGuaiULY, with over 150,000 followers, posted that the “truth about the multi-signature coin sale” announced by the PEPE official is a complete lie and that he himself, Matt Furie, and the entire community have been deceived by the PEPE team.
He claimed that the true identity of the PEPE founder is Zachary Testa, currently residing in Arizona. Zachary is active on social media under the usernames z (@degenharambe) and Lord Kek (@LordKekLol). Zachary Testa was born in 1997, graduated from Arizona State University in 2018, and is now a professional photographer.
LianGuaiULY accused Zachary Testa and his team of making huge profits through PEPE (even buying a Lamborghini) without giving any feedback to Matt Furie, the original creator of “Sad Frog” (Pepe the Frog). In addition, LianGuaiULY claimed to have helped the PEPE team contact the listing team on Binance and the SushiSwap team, which allowed PEPE to be listed on Binance. LianGuaiULY also mentioned that Zachary Testa has had multiple violations of the law in real life when doing photography—repeatedly breaking the law in no-drone zones, being fined multiple times by the National Park Service, and as a result, being blacklisted by the public organization publiclandshateyou.
In addition, LianGuaiULY also condemned the project for insider trading and disclosed the address of a former member of PEPE (0x22f6215b40434d9135b06f1c676fd9291936aac3). It is understood that this address spent 0.0183 ETH (36.73 USD) to buy 1.69 trillion PEPE tokens after the creation of PEPE, and then sold them for 1001 ETH (1.73 million USD), achieving a profit of 54,725 times.
In fact, it has long been a public secret that PEPE team member Lao Shu Cang was involved in insider trading. Just a few days ago, another address suspected to be a team member also sold off their PEPE tokens. According to on-chain analyst Yu Jin, this address spent 0.03 ETH (about 60 USD) to buy 2.43 trillion PEPE tokens on April 15 and sold 554.7 billion PEPE tokens (equivalent to about 670,000 USD) in batches from May to July. On August 25, when PEPE crashed, the address sold the remaining 1.88 trillion PEPE tokens (equivalent to about 1.67 million USD), achieving a total profit of over 30,000 times.
LianGuaiULY also revealed that the PEPE official team holds PEPE tokens worth between 16 million and 17 million USD in at least 9 internal wallets, not limited to the remaining 100 trillion PEPE tokens currently disclosed. The reason why there has been no dumping of tokens so far is that they want to create short positions through centralized exchanges to obtain greater profits. Finally, LianGuaiULY called on everyone to report to the SEC: “When the sanctioned amount exceeds 1 million USD, the reward for the whistleblower can be 10% to 30% of the funds received.”
In the face of this disaster, the most important thing for PEPE is to rebuild user confidence and timely disclose more information to increase transparency.
“It needs to be clear that, in the long run, what happened to PEPE is extremely optimistic. It is better to get rid of a large proportion of bad actors in the supply than to wait for something to happen in the future.” On-chain analyst Yazan remains optimistic about the future development of PEPE, but he also urges the PEPE team to take responsibility and guide the project to develop better. “We just want to see people taking responsibility.”