Fallout from “Hate-Symbol” Pepe Meme Could Have Implications for the Entire Crypto Sector

• Meme coin PEPE has posted one of the largest price rises in the history of crypto.
• Guidance from crypto platform Coinbase has stated that the currency’s symbol could be a “hate symbol”, triggering wild reactions.
• The craze could have far-reaching consequences for the entire crypto sector.

“Pump the Frog” has become the latest rallying cry of cryptocurrency investors as they race to support the new meme currency, Pepe Coin. Launched in only mid-April, Pepe Coin has seen its market capitalisation already increase by a monumental 55,000%. Meme-centric coins are a risky venture at the best of times, but recent ‘guidance’ from crypto platform Coinbase surrounding hate symbols has thrown fuel on this fire.

What has linked Pepe Coin to hate symbols?

The controversy surrounding Pepe Coin (PEPE) relates to the 20-year-old frog-themed cartoon character that is the face of the brand. Coinbase stated on 10th May that it believed that the cartoon character was used as a “hate symbol” by far-right groups. This conclusion was drawn following a report by the Anti-Defamation League, which has had the meme logged on its online blacklist database since 2016.

Coinbase’s actions have triggered outrage among fans and holders of Pepe Coin. Whilst this might initially appear to be a case of rudimentary housekeeping, the unpredictable nature of meme coins means that the full consequences are hard to predict. Some fans of PEPE have already taken their business elsewhere and have verbalised this on social media sites such as Twitter.

@OG_Kenobi_Hello, who has +18,000 followers and is a PEPE supporter, wrote:

“I will be closing my personal and business accounts with @Coinbase and moving them to @Gemini. #PEPE IS NOT A SYMBOL OF HATE”.

Furthermore, the hashtag “#deletecoinbase” hit the trending bar of Twitter; at one time more than 14,000 tweets on this topic were posted in the space of two hours.

The last thing that Coinbase needs is a flood of withdrawals as it could threaten the platform’s own existence, with a knock-on effect on other platforms. For example, rival platform Binance stopped clients withdrawing Bitcoin on 8th May. That was blamed on a processing backlog, but it’s not a good look for the sector.

Who will benefit from the meme craze in cryptocurrency?

Those who bought into Pepe Coin at the beginning of the bull-run will potentially be posting life-changing returns on their trades. The differing approaches of platforms could see winners and losers appear in the cryptocurrency sector. For instance, in amidst the discussions, rival platform Gemini managed to navigate a path that led to picking up new clients. Gemini listed the coin in double-time and gave it the following description:

“$PEPE continues the tradition of giving the control of money back to the people. We’re not here to tell you what money is. We’ll leave that up to you.”

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About the author: Justin Freeman

Justin is an active trader with more than 20-years’ industry experience of working for big banks and hedge funds. He has an inside knowledge of how the financial markets work, thanks to roles including trader on a $750m Event-Arbitrage desk and CRO and COO of hedge funds running a variety of strategies. From stat-arb and trend-following CTA to fixed-income relative value. Firm’s he has worked at include big banks like Citi, and prominent hedge funds including D. E. Shaw and Millennium Capital Management.

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