While Tapioca was able to recover $2.7 million in ETH, the attacker still holds a large amount of funds. Meanwhile, the influencer Jaypeg was accused of scamming a meme coin project, and Andrew Tate’s involvement in meme coins raised serious concerns about market manipulation as most of the tokens he endorsed lost most of their value.
Tapioca Co-Founder Targeted in Phishing Attack
The Tapioca Foundation extended a $1 million bounty to the person who stole $4.7 million from its decentralized finance protocol during what has been described as a “social engineering attack.” In an on-chain message on Oct. 20, the foundation proposed a settlement that will allow the attacker to legally keep $1 million in Tether (USDT), in return for the remaining $3.7 million. Tapioca pointed out that this bounty is quite generous as it is much higher than the usual 10% offered in these cases.
The breach happened on Oct. 18, and resulted in the loss of 591 Ethereum (ETH) and $2.8 million worth of USD Coin (USDC). According to Tapioca, the incident compromised the vesting contract for its Tapioca DAO Token (TAP) and the UDSO stablecoin. The attacker managed to claim and sell vested TAP, then exploited the contract further by adding a minter to create infinite USDO tokens, which were then used to drain a USDO and USDC liquidity pool.
In a Discord message on Oct. 19, co-founder Matt Marino revealed that the other co-founder, who is known as “Rektora,” fell victim to a phishing attack. Rektora reportedly downloaded software during an interview process, which replaced a legitimate transaction with a malicious one. This allowed the attacker to gain access to the contract ownership.
After the incident, Marino announced that Tapioca successfully “hacked the hacker,” and was able to recover 1,000 ETH, which is equivalent to about $2.7 million. This was used as collateral backing for the USDO stablecoin.
During the Oct. 18 attack, almost 30 million TAP tokens were withdrawn from the vesting contract and swapped for roughly $1.5 million worth of ETH. The attacker converted these assets into USDT and transferred the funds to the BNB Chain, where they currently remain. As a result of the attack, the value of TAP plummeted from around $1.40 to just 2 cents, effectively erasing nearly all of its market value.
Tapioca DAO 7d price chart (Source: CoinMarketCap)
Crypto Influencer Accused of Scam
Phishing attacks are not the only threat the crypto community should keep an eye out for. The team behind the ”Uptober” meme coin recently accused popular crypto influencer Jaypeg of taking part in a promotional scam after allegedly receiving tokens to promote the project, selling them, and later denying that they received the funds.
According to members of the Uptober team and its Telegram group, they reached an agreement with Jaypeg to promote the meme coin in exchange for 2% of the token’s supply, which was worth around $2,200. The influencer accepted the terms in a Telegram thread, and received the tokens. The influencer then deleted the receiving addresses that were posted in the group, and claimed the address was random and did not belong to him.
After this, the Uptober team asked for the help of on-chain investigator ZackXBT, who provided evidence contradicting Jaypeg’s claims. The sleuth revealed that the receiving address was the same one that was used to claim airdrops from the Solana Saga smartphone on Jan. 10 of 2024. This happened just hours after Jaypeg posted a video unboxing the Solana Saga and referenced the airdrops. Despite the findings, Jaypeg still holds firm that the wallet address that was mentioned in the Telegram group was a ”random address,” which led him to delete the messages containing it.
Things got even more tense when the influencer also accused the Uptober team of trying to blackmail him. In a public apology, he claimed that he donated the money to charity.
There has certainly been a growing interest in meme coins again. Influencer and analyst Murad Mahmudov believes that the market is in the early stages of a meme coin supercycle, which could peak by the end of 2025. Google Search analytics revealed that search volume for meme coins reached levels close to the previous all-time high of 2023 during the week of Oct. 12, while interest in Bitcoin (BTC) hit a one-year low.
Andrew Tate’s Meme Coin Endorsements Raise Questions
Jaypeg is not the only ‘influencer’ that is causing concern. In fact, the recent wave of meme coins that were endorsed by Andrew Tate and some other celebrities resulted in big losses for investors. Many of these tokens ended up losing 99% of their value very shortly after launch.
Tate is a controversial social media figure, and was quick to jump on the Solana meme coin trend on June 7 when he endorsed over 10 tokens that were known for having no intrinsic value. The dramatic decline in prices after his endorsements raised serious concerns about potential insider trading as many tokens started losing most of their value within weeks.
Bubblemaps, a cryptocurrency analytics platform, shed some light on the issue on Oct. 19 by pointing out that Tate’s first purchase, Germany Token ($GER), saw a 99% price drop in just two months. The token’s supply was largely concentrated, with one cluster holding 30%, which could indicate potential manipulation.
Tate is not alone when it comes to promoting meme coins that experienced sharp declines. Celebrities like 50 Cent, Caitlyn Jenner, and Iggy Azalea have also endorsed Solana-based tokens, many of which saw their values plummet as well.
The Roost (ROOST) token, which was promoted by Tate through social media and merchandise, is among the meme coins that suffered heavy losses, and its price fell by over 90%. The situation worsened when the token’s treasury wallet was hacked, which led to even more losses for the community. In an investigation that was published on Oct. 19, Coffeezilla shared some details about the issues surrounding Roost and revealed the hack involved an anonymous individual.
After Coffeezilla’s investigation, Tate posted on X and suggested that he could manipulate crypto prices at will. The post was a bizarre admission of market manipulation, and only added fuel to the allegations surrounding Tate’s involvement in meme coins. In June, allegations of insider selling surfaced after the launch of Tate’s Daddy meme coin, which briefly surpassed Iggy Azalea’s Mother Iggy (MOTHER) token in market capitalization.
The collapse of celebrity-backed meme coins did not do the industry any good as it cast a negative light on their role in the crypto space due to them quickly losing value after their launch. More than 30 of the celebrity-endorsed tokens that were launched in June on the Solana network have seen price declines of at least 73.23%. Analyst Slorg pointed out in an X post that half of these tokens lost almost all of their value.
The trend of celebrity-backed meme coins extended beyond Tate. UFC contender Khamzat Chimaev’s Smash (SMASH) token is also facing insider trading allegations. Reports indicated that up to 78% of the token’s supply was owned by team and developer-associated wallets, which raised some serious questions about the project’s integrity.
This article was originally Posted on Coinpaper.com
