The Fallacy of Altcoins: Unveiling PNDX’s $2.2 Million Fraud
In a startling revelation that has sent shockwaves through the world of cryptocurrency, the much-publicized altcoin PNDX has been revealed as a deceptive ploy, leaving its investors to grapple with substantial losses amounting to $2.2 million. A high-profile figure in the debacle, crypto influencer Pauly, had been instrumental in rallying investor interest in PNDX through various social media channels. Let’s take a look at this PNDX fraud in more detail.
The explosive arrival and precipitous fall of the meme-based cryptocurrency, Pond0x (PNDX), resulted in an estimated multimillion-dollar loss for investors, as per recent outpourings on social media platforms. Maestro, a trading application, reported that PNDX soared to $0.36 per token just to nosedive almost to nullity within a mere five-minute window.
Pond0x was introduced on July 28 by Jeremy Cahen, the founder of Not Larva Labs, and is popularly recognized by his Twitter handle “Pauly.” Not Larva Labs, although carrying a similar name, is not related to Larva Labs, the creators of CryptoPunks, but instead develops a non-fungible token trading application catering to CryptoPunks and a distinct parody collection named CryptoPhunks.
Upon its announcement, Cahen disclosed the contract address for PNDX and the URL for its official web app, which featured a familiar Pepe meme graphic similar to other successful meme cryptocurrencies. This platform enabled users to mint new PNDX tokens in return for a fixed Ether amount, akin to a presale or fundraiser event.
However, this introduction caused significant confusion as many users had anticipated the fundraiser to be executed on Uniswap. This misunderstanding was fueled further by the joint listing of both the website and the contract address in one post.
As a consequence of this confusion, some investors purchased the token on Uniswap through automated trading applications like Maestro or Unibot, inadvertently inflating its price. At the same time, others minted tokens using the web app, making a profit by selling them in the market.
The resulting losses for some investors were staggering, with complaints flooding social media of losses amounting to thousands and even millions of dollars. A report from a memecoin holder, Rune, suggests an estimated total loss of over $2.2 million from this ill-fated launch. Adding to the calamity, PNDX was found to have a defective transfer function that permitted users to transfer coins from any other user.
Amid this chaos, Rune reported a glimmer of hope: the individual initially responsible for the investors’ loss is allegedly developing a new PNDX version, intending to offer a “community coin” to compensate victims via a “dashboard”.
Deconstructing the PNDX Scam: Exploiting the System for Gain
The truth of the PNDX scam was unveiled when the token’s introduction to Uniswap provided an open door to unethical individuals who capitalized on a malicious loophole in the coin’s smart contract. This swift exploitation, resulting in the mass sale of tokens at inflated rates, led to the immediate crash of PNDX’s value, reducing the once-promising investment to nothing.
In a further deepening of the PNDX scandal, seven addresses were found to have minted PNDX tokens before Pauly publicly shared the website and the PNDX contract, raising alarming questions about potential insider involvement. One of these addresses, for example, minted PNDX tokens a whole 55 minutes prior to Pauly’s announcement, investing approximately 6 ETH into PNDX before selling them for an astounding 382 ETH ($700k).
Another address began minting PNDX tokens a half-hour before Pauly’s announcement, investing 15 ETH and later selling the tokens for 445 ETH (~$800k). A third address, just 4 minutes before the public announcement, invested 4.5 ETH into minting the tokens, later selling them for 33 ETH. Finally, a fourth address minted 5 ETH worth of PNDX just 3 minutes before Pauly’s announcement and subsequently sold it for 20.5 ETH. Interestingly, the remaining three addresses did not engage in any activities with their tokens after minting them. These startling revelations have undoubtedly stoked the fire of ongoing investigations, highlighting the complex web of deceit surrounding the PNDX scam.
Pauly’s Coin Launch: A Case Study in Crypto Manipulation and Investor Alertness
Pauly’s recent launch of a controversial altcoin has seen a divide between winners and losers, and revealed a significant flaw in the token’s system. The primary change implemented was a function named ‘directTransfer’, which alarmingly allows any person to transfer another person’s tokens to any chosen address. This potentially malicious function seems partially intentional.
The safety measures in place, facilitated by the public function ‘safeTransferFrom’, exposes the internal _transfer with no checks, meaning anyone has the ability to move anyone else’s tokens. An ‘address brutalization’ process that appears to involve address manipulation using gas() with the input address, essentially returns the original input address, leaving the situation unresolved: anyone can still transfer anyone else’s tokens.
However, why does this matter? In simple terms, if your tokens get stolen, they can be repossessed by you at the cost of gas. While this might seem a fair game at first, it essentially renders the token valueless. Any liquidity pool can be drained instantly as soon as a deposit is made, leaving PNDX liquidity at zero and thus assigning it a near-infinite value. The individual who drained the pool can then exploit this system by draining the WETH through the pool using some of the drained PNDX.
This situation, where no pool equals no value, indicates that Pauly’s developer might have used Solady’s MockERC20, a token typically used for internal testing, to create their token. As always, the case underlines the importance of thorough due diligence before rushing into the latest investment opportunity, to protect yourself from significant losses. The moral of the story: Don’t be first, be smart.
Betrayed Trust: Pauly’s Failed Commitments Stoke Investor Ire
Before the disaster, Pauly had attempted to soothe investor concerns by promising a week-long liquidity lock-up post-token launch. Yet, despite his later explanations of an unforeseen “issue” and vague commitments to recompense investor losses, discontent among the victimized investors has escalated.
Further intrigue surrounds the case as specific crypto wallets were found profiting greatly amidst the scam. Some of these wallets were tracked purchasing PNDX tokens for a relatively modest $10,000, only to cash out later with astonishing earnings of up to $700,000. These curious transactions have heightened suspicion regarding the full extent of involvement in the deceptive plot.
The Dramatic Turn: Uniswap’s Fallout and Pauly’s Unexpected Role Reversal
The PNDX debacle has left every Uniswap user in a state of turmoil, and misunderstanding has only fuelled the confusion. As the scandal unfolds, Pauly, typically the one exposing scams, is now being labelled a “scammer” himself. This ironic situation suggests a larger conspiracy, with some speculating that high-end developers may have purposefully introduced contract errors to frame Pauly.
Why would Pauly, a doxxed individual, risk his reputation for a mere million dollars remains an unanswered question, intensifying the mystery surrounding this ordeal. His failure to caution users against Uniswap only further muddies the waters and casts an unfortunate shadow over the entire web3 space.
This scandal has divided opinions, turning Pauly into a hot-button topic, with half of the community condemning him and the other half supporting him. His role reversal from scam-detector to the accused has left a sizeable question mark over the entire cryptocurrency industry, highlighting the volatile and unpredictable nature of the space.
PNDX Fraud Aftermath: A Wake-up Call for Investor Vigilance
In the wake of the PNDX scam, the cryptocurrency community has set its sights on ensuring those responsible are held to account and striving for justice for the aggrieved investors. This event serves as a stark warning about the inherent risks of the fast-paced, yet largely unchecked crypto market, emphasizing the need for vigilant oversight, thorough analysis, and full disclosure from influencers and token creators.
The shockwaves from the PNDX scandal continue to ripple out as stakeholders grapple with their losses and cling to hopes of possible restitution or reparations from Pauly and other parties implicated in the scheme. As the crypto sector continues to expand, this event reinforces the necessity for investors to approach with caution and perform comprehensive research to shield themselves from similar devastating scams in the future.