Pond0X token launch snafu leads to millions of dollars in losses

July 30, 2023 Alex Rustok

The launch of memecoin Pond0x has led to millions of dollars in losses for investors, according to multiple reports on social media on July 28. Data from the Maestro trading app shows that the Pond0x (PNDX) token reached a price of $0.36 before collapsing to near zero in a span of five minutes.

Maestro chart of PNDX/USD during its launch. Source: Maestro

The launch of Pond0x was announced on July 28 by Jeremy Cahen, the founder of Not Larva Labs who is better known by his Twitter username “Pauly.” Not Larva Labs is the developer of a nonfungible token trading app for CryptoPunks and for a separate parody collection called CryptoPhunks. It is not associated with Larva Labs, the creators of CryptoPunks.

In the announcement, Cahen listed the contract address for PNDX and the URL for its official web app.

The web app contained a Pepe meme graphic, similar to the ones used in successful memecoins like Pepecoin (PEPE). The app allowed users to mint new PNDX tokens in exchange for a fixed amount of Ether (ETH), similar to a presale or fundraiser. However, many users expected the fundraiser to be done on Uniswap, and the listing of both the website and the contract address in the same post caused confusion, according to social media reports.

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Some users purchased the token on Uniswap through bot trading apps like Maestro or Unibot, increasing its price. Meanwhile, other users minted tokens using the web app and sold them into the market at a profit.

Users who lost crypto complained they had lost thousands or even millions of dollars. In reply to Cahen’s initial post, one Pepecoin enthusiast complained, “WTH !!!! I just got wrecked !!! 4eth [$7,484] worth like $0 !!” Another collector stated, “I put $50,000 and now it’s worth $10 dollars,” which provoked yet another collector to reply, “That’s nothing, I just aped 2.5 million dollars and it’s [now]15 cents.”

According to a report from memecoin holder Rune, investors lost over $2.2 million in the launch.

Another user reported that PNDX has a faulty transfer function that allows users to transfer coins from any other user. Blockchain data shows that the transfer function for the coin is unusual. Instead of containing a line of code that updates the user’s balance, it calls a separate “brutalized_” function.

The code of the transfer function in the PNDX token contract. Source: Etherscan

Cointelegraph could not determine the effect of the brutalized_ function by the time of publication.

About two hours after the initial post, Rune provided an updated report that stated a new version of PNDX is being created by the person who originally drained the money from investors. According to Rune, the new project will provide a “dashboard” to compensate victims through a “community coin.”

Memecoins, or coins associated with a viral internet image or video, first came to prominence with the launch of Dogecoin (DOGE) in 2013. They remain popular today. 

On June 7, several U.S. Securities and Exchange Commission-themed memecoins surged in price after the agency sued crypto exchanges Coinbase and Binance. On July 27, multiple alien-themed memecoins were created and promoted on social media during a U.S. House of Representatives hearing on unidentified flying objects.

Update (July 29, 04:32 am UTC): This article has been updated to disclose the identity of “Pauly” as Jeremy Cahen.