Pixel Penguins scam and subsequent drama shows danger of trusting CT influencers

Pixel Penguins scam and subsequent drama shows danger of trusting CT influencers

Achieving influencer status on social media is something many aspiring non-fungible token (NFT) collectors dream of. Hidden behind profile-picture (PFP) NFTs are figures who send “gm” messages, share the latest crypto news and boost the morale of the Web3 community when the market takes a hit.

Many of these influencers have amassed tens of thousands – sometimes millions – of followers. But with a large following comes a responsibility to act in good faith, knowing that their tweets can influence opinions about whether to buy or sell an NFT.

The role becomes less glamorous when an influencer promotes an NFT project that turns out to be a scam.

Tuesday morning, Web3 influencer Andrew Wang posted a Twitter thread is promoting an NFT collection called Pixel Penguins. In his post, he shared that one of his friends named “Sarah,” or Hopeexist1 on Twitter, had been battling cancer ever since and released the collection to raise money for her hefty medical bills.

“I will put my representative on the line to say this is real, in the midst of all the scams in our room,” Wang said. “I often talk to her art teacher when she’s been in treatment, and he says she’s the best student he’s ever had, that her talent is too valuable, that she needs to survive.”

According to Wang’s thread, each NFT in the pixelated art collection was worth $13, with 20% of the profits donated to charity while the rest was used to pay for Sarah’s treatment. The collection wasn’t new — it launched in February, as Twitter user LeviNotAckerman previously shared a similar story about the Pixel Penguins collection in April.

Wang’s tweet gained traction on Twitter, and soon many users, likely encouraged by his conviction, began imprinting Pixel Penguins to help her cause. Within hours of the initial thread, Pixel Penguins sold out and began trending on the secondary marketplace OpenSea, with the floor price increasing to 0.07 ETH, or around $130, on Tuesday evening.

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But as the day wore on, Twitter users began to suspect that the project was not all it claimed to be. Soon, users uncovered questionable tweets from Sarah’s account dates back to 2021 and resurfaced earlier allegations of stolen works of art. Some even suggested that her cancer diagnosis was made up to attract donations.

But the damage was already done. Soon the Hopeexist1 Twitter account was deleted, along with other traces of the account across the internet.

As the rumors intensified, pseudonymous crypto scout ZachXBT shared ETH addresses linked to the Pixel Penguin NFT collection, showing that the contract had gathered nearly 61.6 ETH, or about $117,000. Two hours later, ZachXBT shared that 63.5 ETH, nearly $119,000, of the funds earned from the project was distributed over two new wallet addresses. While users who had been scammed rushed to figure out how to recoup their losses, the scammers apparently deposited funds into a wallet on cryptocurrency exchange OKX, further obfuscating their paper trail.

“I wanted to help an artist who was fighting cancer,” shared Twitter user DachshundWizard, who wrote that he had been exploited. “I felt I could use the momentum from today of giving hundreds of thousands to people for nothing for good – it worked, but it turned into a blanket and I was taken advantage of big time.”

As of publication, the collection’s floor price has fallen to 0.004 ETH, or around $7. Still, the pool has brought in 216 ETH, or about $403,000, in trading volume, according to OpenSea.

Many NFT collectors who fell for the apparent blanket move began directing their anger at those they felt misled them, particularly Andrew Wang.

In the hours after the Hopeexist1 story imploded, Wang arrived has posted a follow-up thread condemns the gathering and apologizes for his role in promoting it.

“I didn’t have the right wisdom to navigate something like this,” Wang wrote. “Hearing a story as heartbreaking as hers, backed up with art she made, made it hard for me to be objective.”

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He tweeted that he had spoken to someone who claimed to be her teacher before buying her artwork, giving the attraction legitimacy.

“I would say that I would be better in the future, but to be honest, I am not sure that I would be different,” Wang wrote. “I personally feel hurt and cheated… and I feel more terrible that the community bought into Pixel Penguins after I was one of the people who shared her story. I am deeply sorry for that.”

For some, the apology was not enough, considering the impact of his promotion among thousands of followers. Another user pointed out that he had posted another thread promoting her work in December 2022.

“How did you confirm her story?” asked ZachXBT. “Ngl most people have probably characterized before your thread.”

“I bought one of her pieces, trusting that you had confirmed this,” the user said Rocketgirl.

Wang declined to be interviewed for this story.

The crypto community has gravitated toward social media like Twitter and Discord for years to find community and predict price movements. As PFP projects grew in popularity, NFT enthusiasts took to the platform to showcase their holdings and develop a following around their digital identities. This has led to an influx of influencers with thousands of followers who evangelize and push NFT collections, often without any oversight.

Investments are always risky, especially in the crypto space, and even more so when dealing with NFTs that have an artistic or emotional value attached to them. It can be difficult to distinguish honest projects from fraud, which is why influencers often position themselves as trusted thought leaders.

But scam after NFT scam has served as a reminder that trusting one source explicitly without doing your own research – a tenet of the crypto space – is a fool’s errand.

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Thousands of nervous users tuned into one Twitter Space Tuesday night to hear from a handful of influencers, including Wang, about the Pixel Penguins scam.

While the discussion focused on the lies used to prop up the project, Twitter user Fetty talked about the larger implications of influencers promoting collections that sometimes turn out to be bogus.

“I’ve kind of heard people repeat the point that it’s very difficult to do due diligence, or that we can’t blame [influencers] to not realize this was a scam,” Fetty said. “If you’re going to be in a position of influence like this … or even try to support projects, you have to take responsibility.”

Wang responded, claiming that he never meant to provide any investment guidance or pressure individuals to create NFTs from the pool.

“Please don’t take what I say as trading advice,” Wang said. “If I implied that today with my tweets, I don’t think I did, but because that’s where the space is…sorry.”

While some jumped to Wang’s defense, others pointed out that this is often a familiar playbook used by influencers to absolve themselves of responsibility.

As with many other digital subcultures, NFT communities have flourished online and leading voices in the space have emerged. But often it feels like the NFT space is particularly lawless, with influencers facing small consequences for their actions that ultimately affect thousands.

Ultimately, each individual collector is responsible for properly surveying a project before investing funds. Still, these famous stories serve as a reminder that while you may feel like you “know” an influencer, you rarely know their motivations and how well they’ve actually considered a project.

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