At one point, the floor price of alleged "charity project rug" NFTs surged from $13 to around $130.
In the volatile and evolving world of non-fungible tokens (NFT), the Pixel Penguin project found itself at the center of a controversy.
Pixel Penguin was quietly launched in February, but it was only on May 31st that it caught the wider public attention, thanks to a Twitter thread by influential Web3 personality Andrew Wang.
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In its tweet, Wang introduced his friend Sarah, known online as Hopeexist1, as the brains behind Pixel Penguin, sharing her intention to use the project to raise funds for her cancer treatment.
Andrew Wang endorsed the project with claims that 20% of the profits from the $13 NFT mint price was going to charity, with the remaining 80% funneled towards Hopeexist1's medical expenses.
I'll put my rep on the line to say this is for real amidst all the scams in our space. I speak with her art teacher often when she's gone for treatment and he says she's the best student he's ever had, that her talent is too precious, that she must survive.
This endorsement led to an immediate rush on Pixel Penguins NFTs, resulting in a sell-out and a floor price jump from 0.0099 Ether (ETH) to approximately 0.0126 ETH, equivalent to about $130.
However, not everyone was convinced, and suspicions led to investigations within the NFT community. Accusations surfaced that the project creator had previously sold stolen art, and doubts were cast over the honesty of her cancer diagnosis.
A pivotal discovery was made by ZachXBT, who traced more than $117,000 worth of ETH in the Pixel Penguin smart contract and followed the funds as they were diverted to two new wallet addresses.
Blockchain investigator ZachXBT called out the project as a potential “charity project rug.”
After these developments, Hopeexist1 abruptly deleted her Twitter account, disappearing from the scene. In the wake of these events, the floor price of Pixel Penguins' NFTs experienced a drastic fall to 0.004 ETH, equating to just $7.
The Pixel Penguin controversy serves as a reminder of the necessity for due diligence and transparency in the rapidly growing NFT space.
