In a recent surge of a memecoin called $PEPE, some users have seen their investments skyrocket by 1000x in just four days, with a few wallets going from an average cost of 0.61 $ETH ($1210) to over $9M – a staggering 7500x return. However, the timing of the purchases has raised eyebrows and drawn attention to potential insider trading.
Upon analyzing the distribution of trades on Uniswap V2, unusual activity was detected. A group of freshly funded wallets purchased $PEPE minutes after the token started trading, and these wallets now control almost 10% of the supply. Three distinct sets of wallets were identified as part of this group.
First, seven wallets funded from the Fixed Float exchange bought a total of 17.7 T $PEPE with an average cost of 0.34 $ETH, now facing a $5.5M unrealized profit. Second, two wallets funded from the ChangeNOW exchange bought 5T $PEPE tokens at an average price of 0.1 $ETH, currently valued at $1.5M. Third, an entity initially funded from ByBit spread 0.17 $ETH across four wallets, purchased a total of 6.2T tokens, and is now looking at a $2.2M profit.
This activity raises questions about whether these wallets belong to insiders or the development team. The impeccable timing and considerable holdings after a 1000x run are cause for suspicion. Additionally, the thin liquidity available on-chain means that should these wallets sell even 10% of their holdings, it would cause the token’s value to plummet. It is crucial for current holders to monitor the activity of these whales.
Though it is impossible to confirm whether these wallets belong to insiders, their behavior raises questions and could align with the history of memecoins. On the other hand, it is impressive that these wallets demonstrate strong conviction by holding onto their positions even after a massive 1000x run.
This analysis highlights the importance of understanding the potential risks associated with memecoin investments and keeping a close eye on suspicious trading activity. Investors should exercise caution and conduct thorough research before investing in any cryptocurrency, particularly those with a history of volatility and insider involvement.