There are reasons to think the latest mania over memecoins—highly volatile cryptocurrencies based largely on internet jokes—bodes well for the business of Coinbase Global, but the broker has gotten itself in hot water over one token.
Dogecoin
and
Shiba Inu
are the most familiar memecoins. The former is the eighth-largest digital asset by market capitalization, but a new name has taken crypto markets by storm: Pepe.
Pepe references the Pepe the Frog meme, which has a checkered cultural reputation. The Anti-Defamation League has named the Pepe the Frog meme a hate symbol, though it has also noted that the character didn’t initially have racist connotations and that many uses of the meme continue to be nonbigoted.
Coinbase
(ticker: COIN) tried to make just that point this week. In research explaining Pepe’s rise, it noted that the meme, which surfaced almost two decades ago, has “been co-opted as a hate symbol by alt-right groups.” People on Twitter, an influential platform for crypto folks, didn’t like it, with the critical research prompting anger against Coinbase and even calls to boycott the exchange.
“Coinbase is refusing to list the Pepe coin, claiming it’s a hate symbol of the alt right. This is the same company notorious for listing absolute [expletive] tokens all of 2020-2022,” wrote one account, Autism Capital, which has some 220,000 followers on Twitter.
The frog meme mini-scandal even elicited a mea culpa from Paul Grewal, Coinbase’s chief legal officer.
“We screwed up and we are sorry,” Grewal said on Twitter Thursday. “Yesterday we shared an overview of the Pepe meme coin to provide a fact-based picture of a trending topic. This did not provide the whole picture of the history of the meme and we apologize to the community.”
Pepe has taken off since its launch in April. It was listed on OKX, a major crypto exchange, on May 1, and Binance, the world’s largest crypto exchange, began handling it on May 5. That has channeled liquidity into the market.
Pepe’s trading volumes have at times dwarfed that of much larger peers like Dogecoin in recent weeks, according to the data provider CoinGecko. The token’s market capitalization soared to a peak of $1.8 billion after it was listed on Binance, landing it among the top 100 cryptos by market value.
While the rally has cooled, taking the market cap below $550 million—Pepe’s price fell 19% Friday as a slide in Bitcoin dragged many coins lower—there are few indications the frenzy is over. Recent declines appear to be profit-taking by early investors, and signs remain that crypto “whales”—influential market participants—are wading in.
Write to Jack Denton at [email protected]
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