The newly popular memecoin Pepe (PEPE) tanked 13% in value on Thursday after the crypto community noticed strange alterations to the multi-signature wallet used for enhancing the token’s adoption.
As noted by @Crypto_Noddy on X, the multsig wallet changed its threshold for token transfers from 5 of 8 to just 2 of 8 wallet signatures – far less than what is expected for storing reserves for popular coins.
The multisig is meant to reserve a portion of Pepe’s supply to provide liquidity for future exchange listing, liquidity pools, and bridges.
Onchain sleuth ZachXBT, backed up the claim, noting that the wallet has now sent $15.6 million PEPE tokens to a mix of exchanges including Binance, OKX, and Bybit. The amount left in the multisig totals 3.8% of the token’s supply ($10.4 million).
TLDR: They transferred out $15.6M worth of PEPE from the multisig to an EOA address. That address started depositing the funds to exchanges.
Then they changed the number of signers on the multisig from 5 -> 2 suddenly (bad security choice).
— ZachXBT (@zachxbt) August 24, 2023
“They held unlocked PEPE tokens in a multisig with unknown signers meaning they could sell the tokens at any time,” the analyst added.
ZachXBT acknowledged that all wallet signers may have already belonged to the same two people as now, but there’s no way to know at present.
Compromised keys are what enabled the $600 million Ronin Bridge hack last year, which stands as the largest DeFi hack in history.
PEPE currently trades for $0.0000009472, down 13.74% on the day, and 29.61% from last month.
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