On Aug. 24, 16 trillion Pepe tokens (PEPE), worth around $15.7 million at the time, were unexpectedly withdrawn from the project’s multi-signature centralized exchange wallet. An anonymous founder of the meme coin pointed the finger at three former team members as the culprits behind the transfers in a post on Aug. 25.

The transfer, in which around 60% of the PEPE tokens in the multi-sig wallet were moved, sparked speculations of a rug pull. The stolen Pepe tokens were quickly transferred to and sold on exchanges including Binance, OKX, KuCoin, and Bybit. The price of PEPE fell about 15% on the transfer day as investors started panicking.

Digital asset research firm ASXN also reported that the number of signatures required to operate the multi-sign wallet was changed from 5/8 to 2/8.

Pepe founder’s explanation of the incident

According to the founder, who posted his extensive statement on X, formerly Twitter,

“Since its inception, $PEPE has unfortunately been plagued by inner strife with a portion of the team being bad actors led by big egos and greed.”

The founder added that while the project is now “entirely free of this baggage,” the founding team often faced conflict since its early days. The “majority” of the token’s founding team started distancing themselves after the first week of project inception, the founder noted.

The founder complained that these team members “blocked” progress on making donations or purchases with multi-sig tokens. The alleged team members withheld signatures either because of disagreements, inability to provide signatures, or being unreachable for “weeks at a time,” the founder wrote, adding: 

“Yesterday these 3 ex-team members came back behind my back, logged onto the multi-sig, stole 16 Trillion/ 60% of the 26 trillion multi-sig tokens, and sent them to exchanges to sale.”

After the unplanned transfers, these team members removed themselves from the multi-sig wallet “in an attempt to absolve any association to $PEPE,” the founder alleged. The rogue team members also deleted their social media accounts, so that the founder was left with  ‘nothing but a message stating “the multi-sig has been updated, you are now in full control”.’

What comes next

The faceless founder of Pepe assured investors that the remaining 10 trillion PEPE tokens in the multi-sig wallet as well as the project’s official Twitter account are in “safe hands.” The founder wrote:

“I am shocked at what took place and would like to apologize for all of the fear and uncertainty and any losses the actions of these bad actors have caused members of our community.”

The founder explained that the tokens in the affected multi-sig wallet were “never meant to be sold on the market or for the team to profit from.” The anonymous persona further stressed that if he had been in charge of the affected wallet “the whole time,” he would’ve made some donations and burned the majority “long ago.”

Dileaniating his plan for the future, the founder wrote:

“I have started discussions with some prominent community members who will be helping me guide things forward, and I am excited to be in the position to do everything we can to set up $PEPE to thrive as the decentralized and anti-fragile meme-coin asset it deserves to be.”

Regarding the remaining 10 trillion PEPE in the multi-sig wallet, worth around $9 million at present, the founder said he would transfer them into a new wallet, “where they will safely rest until a use or burn arises.” The founder is negotiating for web domains and usernames for Pepe and once the tokens have been used for such sales or donations, he will “burn the remainder.”

Skepticism in the Pepe community

The founder’s post on X found mixed responses, with some urging the founder to immediately burn the remaining tokens in the multi-sig wallet.

Other users, however, questioned the veracity of the claims. The skepticism is based on the fact that the transaction that changed the number of signers required to 2/8 was signed by five wallets, possibly indicating the involvement of more than three people, contrary to the founder’s claims.