The story of PEPE's investor: a millionaire trapped in paper.
In the world of cryptocurrencies, cases of modest investments turning into multimillion-dollar fortunes are fascinating, but they don’t always turn out as they seem. A recent high-profile example is that of an investor who turned $27 into $67.6 million using the $PEPE token, a cryptocurrency based on the popular Pepe the Frog meme. However, this investor faces a major challenge: he can’t withdraw his funds.
The meteoric rise of PEPE
Launched in April 2023, $PEPE quickly attracted attention thanks to its link to one of the most recognizable memes on the internet. Its popularity grew exponentially, leading to massive increases in its value and turning several early investors into “paper millionaires.” The cryptocurrency even managed to stand out among other meme coins, such as Dogecoin and Shiba Inu, reaching third place in the market for these thematic cryptocurrencies.
The blacklist problem
The investor purchased over 2 billion PEPE tokens on April 14, 2023, an investment that quickly grew to be worth millions. However, on-chain data shows that this investor's wallet was blacklisted by PEPE developers, preventing them from withdrawing or exchanging their tokens. While the exact reasons are uncertain, there are two possible explanations:
1. Market stability: Avoid a sell-off that could cause the price to collapse.
2. Liquidity protection: Limit market manipulation by large investors.
Liquidity risks in meme coins
This case reflects the inherent problems of cryptocurrencies with low liquidity. While the value on paper can be immense, converting those gains into actual cash is a challenge. Any attempt at a sell-off could lead to significant price slippages or, in extreme cases, a complete collapse of the coin’s value.
