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Was it a Pump and Dump? Few Will Ever Understand

A leaked Telegram chat has the DeFi community decrying that some of the space’s most well-known influencers were orchestrating a pump and dump scheme around a token called $FEW, an accusation the crypto personalities involved deny.

The question is whether the group was created with the specific purpose of leveraging the members’ follower base to push the price of a token they would later sell. The answer is probably not the same for everyone. There were more than 500 people in the chat at some point, and it’s unlikely that all of them had the same intentions.

This latest drama highlights that speculation surrounding self-proclaimed DeFi projects is reaching a frenzy. A dollar sign placed in front of certain words —specifically those related to memes or food items— spouted out on Twitter in some cryptical haiku-like message peppered with fire and rocket emojis, will create an irresistible urge to buy that token, regardless of what or who is behind it.

Next Big Thing

How did we get here? Because of the success of this new DeFi wave of meme-based, community-owned and led, hacked overnight, unaudited projects. After seeing coins like YFI, YAM and MEME soar, everyone wants in on the next big thing.

This wouldn’t be an issue if those so eager to get rich off a DeFi experiment actually had the intention of producing something of value. The problem is when the only goal behind a token is for those who issued and own it, to shill it on Twitter and quickly sell it to others for a quick profit.

It’s unclear whether that was the intention of those involved in $FEW, but leaked chats have some in the DeFi and the Ethereum community speculating that to at least part of the group, it may have been.

Reverse Engineer MEME

So what actually happened: Yesterday someone started a Telegram group dubbed “The Experiment” and invited well-known crypto personalities. That someone might be a Telegram user who goes by the name of “Sam Mr.Boson,” as he appears to be the admin in leaked chat logs.

According to those screenshots, he created the group with the intention to “reverse engineer MEME,” which means: get a bunch of people in a Telegram group, airdrop a token, list it on Uniswap, ride the hype around that token to create an actual project around it, and hopefully see said token rally so everyone who held on to the airdrop has half a million dollars on paper a few weeks later.

Token Airdrop

Mr.Boson said the plan was to airdrop a token to the first 50 in the group. About an hour later, the 50-people target is reached and now conversation starts shifting to jokes about the “few understand” meme, some talk about what the project will actually do, while others are still trying to figure out what actually is going on.

The group grows to more than 500 people in less than four hours, according to Taylor Monahan’s play-by-play. By this time, many were asking about the token airdrop and sending their ETH addresses, while putting pressure for the token to be listed on Uniswap.

Promoting FEW

42k FEW tokens were created after that, and 40k were distributed among 52 addresses, with 769 going to each address, and 2k remaining, according to Etherscan.

Meanwhile, recognized and respected names like Alex Masmej and Anthony Sassano appeared to have been promoting the token on their Twitter feeds, while others like DeFi Dude said he was ready to start shilling the token in the chat. They have all since apologized for their statements, said it was all a joke and meant as fun, not as an effort to cash in.

Leakes Chat

It was around this point that screenshots of the chat were leaked, exposing what appeared to be a plan to create a worthless token, and pump and dump it. What was especially upsetting to some, was to see so many familiar names in the chat.

The original FEW token wasn’t listed on Uniswap, so it’s unlikely that the recipients had a chance to cash out (unless they did over-the-counter deals). Some of the addresses have also burned the tokens, according to Etherscan.

Fake FEW Scams

Still, others saw the opportunity to profit from the hype that was generated by widely followed and recognized crypto personalities, aka “influencers,” tweeting about it and at least two fake FEW tokens were added to Uniswap. One of them, which had $15k of liquidity, listed at over $80 and has since dumped to $35.

Others are taking advantage of the scandal to push yet another token: $MANY. *face-palm emoji.*

Reputations Hurt

In the end, we won’t know for sure whether the creators and promoters of the token had the intention to pump and dump it. Unfortunately, even if they weren’t, scammers were still able to take adavantage of the project and the reputations of those involved were hurt.

“For those involved, this experiment showed that years of hard work and reputation can be quickly challenged by a few poorly thought out Telegram messages,” said Cooper Turley, Audius community lead and Defiant contributor, who was invited to the group. “Despite never listing, FEW is an experiment around user safety and social responsibility that we should all learn from.”

One thing that can be concluded from all this is that speculation around DeFi is starting to shift from throwing money and creating protocols that are at least aiming to serve some financial function, to throwing money and creating tokens that serve no purpose at all.