ResearchesCrypto MarketResearch PEPE: Meme Revolution or Market Manipulation?

Research PEPE: Meme Revolution or Market Manipulation?

December 9, 2024
Crypto Market
11 min read

Pepe Coin (PEPE) is a deflationary memecoin based on Ethereum, created as a tribute to the popular meme Pepe the Frog. The project has gained significant popularity in the cryptocurrency world; however, its anonymous nature and lack of formal structure raise questions about its fundamentals.

Whitepaper Analysis

Pepe Coin lacks a traditional whitepaper. Instead, its official website presents a simplified roadmap consisting of three phases: Meme, Vibe and HODL, and Meme Takeover. The absence of detailed information about technological or business goals suggests that the project focuses primarily on the meme aspect, without a concrete plan for technological development.

Team and Advisor Evaluation

The project was launched by an anonymous team in mid-April 2023. The lack of information about team members or advisors makes it impossible to assess their qualifications and experience. In the cryptocurrency world, anonymity can raise concerns about transparency and accountability.

Blockchain Technology Assessment

Pepe Coin operates on the Ethereum blockchain as an ERC-20 token. Using Ethereum’s established network provides a level of security and scalability. However, the lack of unique technological solutions or innovations within the project may limit its long-term potential.

Tokenomics

The total supply of PEPE is 420,690,000,000,000 tokens. The project claims no transaction taxes and implements token burns for LP tokens to drive deflationary value. However, according to data from Etherscan, the top 15 wallets control over 87% of the total PEPE supply, raising concerns about centralization and potential market manipulation.

Competition Assessment

In the memecoin space, Pepe Coin competes with projects like Dogecoin, Shiba Inu, and Floki Inu. Dogecoin, as one of the first memecoins, holds a strong market position and a large user base. Shiba Inu gained traction through marketing strategies and ecosystem functionalities. In comparison, Pepe Coin appears to offer fewer unique features, which could hinder its ability to compete in the long term.

Regulatory Analysis

The lack of formal structure and team anonymity may attract regulatory scrutiny, especially amid increasing oversight of the cryptocurrency market. If regulations tighten, projects with unclear structures may face difficulties complying with legal requirements, potentially affecting their operations and token value.

Security Audit

Information about security audits for Pepe Coin is limited. The lack of publicly available audit reports raises concerns about the security of its smart contracts and potential vulnerabilities that malicious actors could exploit.

Ownership Structure Analysis

A significant concentration of tokens in the hands of a few holders raises questions about the project’s decentralization and its resilience against actions by large token holders. Such a structure could lead to power centralization and market manipulation.

Cryptocurrency Investigations

In August 2023, an unauthorized transfer of approximately 16 trillion PEPE tokens, valued at around $15 million, occurred from the project’s multisig wallet. The anonymous founder blamed three former team members for the incident, highlighting internal conflicts and potential governance issues.

Compliance Verification

The lack of formal structure and team anonymity complicates the verification of the project’s compliance with applicable regulations. If cryptocurrency laws become stricter, Pepe Coin may struggle to meet legal requirements, impacting its operations and reputation.

Summary of Findings

Pepe Coin is a memecoin based on the popular Pepe the Frog meme, operating on the Ethereum blockchain. The absence of a formal whitepaper, team anonymity, and lack of unique technological solutions raise concerns about the project’s long-term value. Additionally, incidents of unauthorized token transfers and internal conflicts highlight potential management issues. Investors should exercise caution and thoroughly evaluate risks before deciding to invest in PEPE.

Investor Information

No information is available regarding institutional or angel investors in Pepe Coin.

Forensic Report

Pepe Coin (PEPE) is a memecoin inspired by the popular Pepe the Frog meme, launched in April 2023 by an anonymous team of developers. Since its inception, the project has faced numerous controversies and incidents, raising concerns about its credibility and integrity.

Incidents Related to Fund Management:

  • August 2023:
    Approximately 16 trillion PEPE tokens, valued at around $15 million, were transferred from the project’s multisig wallet to four different cryptocurrency exchanges. Simultaneously, the required number of signatures for the wallet was reduced from 5 out of 8 to 2 out of 8, sparking suspicions within the community. Following these events, the official PEPE account on X (formerly Twitter) announced that three team members had left the project, leaving the remaining member without control over the multisig wallet. The anonymous project founder accused the former team members of unauthorized actions and misappropriation of funds.
  • October 2023:
    In response to the above incident, the PEPE team burned 6.9 trillion tokens valued at approximately $5.5 million, representing 1.6% of the total PEPE supply. This action aimed to calm the community and restore trust in the project.

Lack of Transparency and Team Anonymity:

From the beginning, the PEPE development team has remained anonymous. The absence of information about team members prevents the verification of their experience, qualifications, or past involvement in other cryptocurrency projects. This anonymity, combined with prior incidents, raises concerns about potential misconduct and lack of accountability.

Token Manipulation and Ownership Centralization:

Analyses have revealed that a significant portion of PEPE tokens is held by a small number of wallets. Such concentration of ownership can lead to market manipulation, where large token holders influence prices through bulk sales or purchases. This centralization contradicts the core blockchain principle of decentralization.

Lack of Security Audits:

No publicly available information exists regarding audits of PEPE’s smart contracts. This raises questions about their security and potential vulnerabilities that malicious actors could exploit. In the cryptocurrency space, security audits are crucial for ensuring project integrity and building investor trust.

Summary:

Since its launch, Pepe Coin has been embroiled in numerous controversies, including unauthorized fund transfers, lack of team transparency, and potential market manipulation. The anonymity of developers and absence of security audits further heighten the risks associated with the project. Investors are strongly advised to exercise caution and carefully evaluate risks before considering an investment in PEPE.

Technical Analysis of the Project

Pepe Coin (PEPE) is a memecoin based on the Ethereum blockchain, utilizing the ERC-20 token standard. Operating within Ethereum’s proven infrastructure provides a certain level of security and compatibility with various wallets and cryptocurrency applications.

However, the PEPE project has encountered certain incidents that raise concerns about security and management:

  • August 2023:
    A significant amount of tokens was transferred from the PEPE project’s multisig wallet to various cryptocurrency exchanges, causing the token’s value to drop by over 20%.

It is worth noting that the lack of publicly available information on security audits conducted for PEPE may raise additional concerns. CertiK, a platform specializing in security audits of blockchain projects, does not provide detailed data on audits conducted for PEPE.

Summary:

In summary, although PEPE leverages Ethereum technology, which offers solid security foundations, incidents related to fund management and the lack of transparency regarding security audits may raise doubts about the project’s integrity. Investors should exercise caution and carefully assess the risks before deciding to invest in PEPE.

Network Activity Analysis of the Project

Pepe Coin (PEPE) has gained significant popularity through the intensive use of social media platforms such as Twitter and Reddit, where the community actively promoted memes and viral content, attracting both experienced investors and newcomers.

SEO and SEM Analysis:

The PEPE project effectively leveraged digital marketing strategies, focusing on the viral nature of its content and memes, which contributed to the rapid growth of its visibility. A strong presence on social media and active community engagement played a key role in building the brand and capturing media attention.

Community Manipulation and Potential Scams:

There have been reports suggesting that PEPE may have been subject to market manipulation. Some investors were driven by FOMO (Fear of Missing Out), prompting them to purchase tokens in hopes of quick profits.

Additionally, PEPE has been targeted by phishing scams. Fake websites and Twitter accounts impersonating official PEPE channels attracted thousands of followers, exposing them to token theft.

Buying Twitter Followers:

There is no direct evidence that PEPE purchased Twitter followers. However, the rapid growth in followers, particularly in the context of fake accounts, may suggest the possibility of artificially inflating follower counts to boost credibility and reach.

Summary:

While PEPE has achieved significant popularity through the effective use of social media and marketing strategies, concerns remain about potential market manipulation and scams associated with the project. Investors should exercise caution and thoroughly evaluate risks before deciding to invest in PEPE.

Arkham Intelligence Analysis

Arkham Intelligence, a platform specializing in blockchain analytics, has introduced a feature called Token Pages, enabling users to quickly research tokens across various blockchains. A notable application of this feature is the analysis of the memecoin PEPE.

Arkham Intelligence, a platform specializing in blockchain analytics, has introduced a feature called Token Pages, enabling users to quickly research tokens across various blockchains. A notable application of this feature is the analysis of the memecoin PEPE.

Key Features of Token Pages in the Context of PEPE:

  • Token Metrics:
    The top bar displays essential data such as price, supply, market capitalization, trading volume, and historical price highs and lows.
  • Network Visualization:
    The “Visualize” option allows users to map the network of major PEPE holders and analyze connections between large wallets and funding sources.
  • Flows and Holders:
    Panels on the left provide aggregated recent flows and the top holders of the token, enabling identification of key wallets and potential “whales.”
  • Transactions:
    The bottom-right panel shows all transactions related to the token, with filtering options for more detailed analysis.

Insights and Applications:

These tools provide users with insights into PEPE’s holder structure, enable monitoring of large transfers, and facilitate identification of connections between key players in the token’s ecosystem. These features are particularly useful for investors and analysts seeking to understand the dynamics of the PEPE market and assess potential risks associated with token concentration in the hands of a few holders.

Notably, Arkham Intelligence offers blockchain de-anonymization tools, allowing for the identification of individuals and institutions behind cryptocurrency activity. This capability enhances the monitoring and analysis of actions related to PEPE, enabling the identification of potential market manipulation or fraudulent practices.

Conclusion:

Leveraging Arkham Intelligence’s tools for PEPE analysis enables a deeper understanding of holder structures, token flows, and connections between key entities. This is crucial for evaluating the security and integrity of the project, helping stakeholders make informed decisions.

Summary of the PEPE Project Analysis

1. Whitepaper Analysis:

  • PEPE does not have a traditional whitepaper. Instead, it presents a simplified roadmap focusing on memes and marketing.
  • The lack of detailed technological and business objectives indicates limited ambitions beyond the memecoin aspect.

2. Team and Advisor Evaluation:

  • The project was launched by an anonymous team in April 2023.
  • Anonymity raises concerns about transparency and accountability, especially in the context of financial and technical incidents.

3. Blockchain Technology Assessment:

  • PEPE is an ERC-20 token on the Ethereum blockchain, ensuring basic compatibility and security.
  • The lack of innovative technological features limits its competitive advantage.
  • The August 2023 multisig incident highlights potential management flaws.

4. Tokenomics:

  • PEPE has a total supply of 420,690,000,000,000 tokens with a declared deflationary policy.
  • The top 15 wallets control over 87% of the supply, indicating high centralization and market manipulation risks.

5. Competitive Assessment:

  • PEPE competes with memecoins like Dogecoin and Shiba Inu, which offer more developed ecosystems and communities.
  • The absence of unique features hinders the creation of a lasting competitive edge.

6. Regulatory Analysis:

  • The team’s anonymity and lack of formal structure may attract regulatory scrutiny.
  • Increasing cryptocurrency regulations could pose a threat to the project.

7. Security Audit:

  • The absence of public audit reports raises concerns about the security of the code and smart contracts.
  • Incidents involving token transfers highlight potential gaps in fund management.

8. Community Manipulation and SEO:

  • PEPE leverages social media platforms like Twitter and Reddit for promotion.
  • Suspicions exist about artificially inflating follower counts and manipulating community emotions (FOMO).
  • Fake accounts and phishing scams have been significant issues within the PEPE ecosystem.

9. Analysis Using Arkham Intelligence:

  • Arkham Intelligence tools reveal a high concentration of tokens and significant flows between key wallets.
  • Network visualization of PEPE helps identify potential market manipulators.

10. Major Risks:

  • Centralization: A small number of wallets control most of the token supply, increasing manipulation risks.
  • Management Issues: The August 2023 incident and internal team conflicts highlight instability and lack of transparency.
  • Lack of Audits: Insufficient technological safeguards could lead to further incidents.
  • Reputational Risks: Potential manipulations and phishing scams undermine the project’s credibility.

Conclusion:

The PEPE project is an intriguing example of a memecoin that gained rapid popularity. However, its foundations raise many questions and concerns about its long-term sustainability and security. Investors are advised to exercise caution and thoroughly assess risks before considering involvement in PEPE.

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

Source:
https://cryptoslate.com/pepecoin-founder-blames-nefarious-ex-team-members-for-unexpected-16m-withdrawal/
https://cryptonews.net/news/security/20845270/
https://coincodex.com/article/29575/pepe-three-ingredients-to-the-meme-coins-success-amidst-the-bear-market/
https://arkhamintelligence.com/tr/announcements/arkham-token-pages-are-live/
https://todaytrader.com/blog/the-rise-and-fall-of-pepe-meme-coin-a-modern-cryptocurrency-phenomenon/
https://skynet.certik.com/projects/pepe/https://cryptopost.com/pepecoin-security-analysis
https://www.theblock.co/post/247576/pepe-team-members-stole-15-million-from-multisig
https://www.cryptopolitan.com/inside-pepecoin-scandal-rogue-team-members-accused-of-16-million-heist/
https://coingape.com/pepe-coin-team-gives-clarification-of-the-16-trillion-pepe-tokens-theft/
https://cointelegraph.com/news/rogue-pepecoin-team-members-blamed-for-pepe-multsig-withdrawal
https://coincodecap.com/pepe-team-reveals-15-million-theft-from-former-members
https://finance.yahoo.com/news/pepecoin-says-bad-actors-team-063736566.html
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https://medium.com/%40MetatrustL/token-pepe-security-checker-report-by-metatrust-labs-c59014fbc3e5

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