The newly popular memecoin Pepe (PEPE) tanked 13% in value on Thursday after the crypto community noticed strange alterations to the multi-signature wallet used for enhancing the token’s adoption.

• As noted by @Crypto_Noddy on X, the multsig wallet changed its threshold for token transfers from 5 of 8 to just 2 of 8 wallet signatures – far less than what is expected for storing reserves for popular coins.
• The multisig is meant to reserve a portion of Pepe’s supply to provide liquidity for future exchange listing, liquidity pools, and bridges.
• Onchain sleuth ZachXBT, backed up the claim, noting that the wallet has now sent $15.6 million PEPE tokens to a mix of exchanges including Binance, OKX, and Bybit. The amount left in the multisig totals 3.8% of the token’s supply ($10.4 million).

TLDR: They transferred out $15.6M worth of PEPE from the multisig to an EOA address. That address started depositing the funds to exchanges.

Then they changed the number of signers on the multisig from 5 -> 2 suddenly (bad security choice).

— ZachXBT (@zachxbt) August 24, 2023

• “They held unlocked PEPE tokens in a multisig with unknown signers meaning they could sell the tokens at any time,” the analyst added.

• ZachXBT acknowledged that all wallet signers may have already belonged to the same two people as now, but there’s no way to know at present.
• Compromised keys are what enabled the $600 million Ronin Bridge hack last year, which stands as the largest DeFi hack in history.
• PEPE currently trades for $0.0000009472, down 13.74% on the day, and 29.61% from last month.