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The community exposed the Polygon scandal. Are the top leaders controlling the meme coins and making money?

BlockBeats2024/05/21 11:34
By:BlockBeats
Original author: Rahul | Polygon Intern (@Rahul__Ghangas)
Original translation: BlockBeats


Editor's note:

On May 21, community member Rahul | Polygon Intern (@Rahul__Ghangas) posted a long article on the social media platform accusing Polygon's senior management and internal personnel of manipulating a meme coin called $ELE. The tweet was accompanied by a large number of screenshots as evidence. In addition to Polygon executives, the evidence also involves Symbolic Capital, Multibit, BounceBit, GeekCartel, Salus Security and other projects and their leaders. BlockBeats note that the relevant claims have not been confirmed and will continue to pay attention to the progress of the incident.

This incident has sparked a lot of discussion in the crypto community. Crypto researcher @nake13 summarized the "evidence" as follows:

Polygon's senior and internal staff planned to launch a meme coin called $ELE, misleading and exploiting developers and community members, and eventually leading to the collapse of the project. The main people involved include Symbolic Capital partner and Polygon consultant Kenzi Wang, Multibit and BounceBit co-founder Jack Lu, Polygon Labs strategy director Sanket Shah, and GeekCartel GP and Salus Security co-founder Jiayi Li.

The incident started on January 3, 2024, when a group of KOLs were gathered in a Telegram group to promote the $ELE meme coin. However, the token generation event actually took place in secret in December 2023, with most of the supply controlled by insiders. Developers and KOLs were promised to be paid in USDC, but there were many warning signs from the beginning, such as payment delays and out-of-pocket expenses.

The entire project revolved around the story that Polygon co-founder Sandeep had a pet elephant, which was actually just a publicity stunt. Insiders kept selling tokens, while developers and KOLs worked day and night to promote the project in the hope of eventually getting paid. After months of hard work and deception, the project finally collapsed, falling from $17 million to $2 million, and all early wallets began to sell frantically, and developers and KOLs were furious because they never got the promised rewards.

The Polygon team tried to distance themselves from the responsibility by publishing photos of Sandeep's "pet elephant", but it turned out to be just a ridiculous scam. Eventually, the on-chain traces of Shawn Chong and Jiayi Li were revealed. They argued that internal fighting led to the sell-off, but the fact was that they used their power to commit fraud.

Details of "manipulation" exposed

@Rahul__Ghangas pointed out how Polygon senior management and other insiders misled and exploited developers over a period of months, and slowly destroyed the community under the pretext of meme coins. If this is proven to be true, it means that many Memes may be created by the funds, high control and KOL orders of the top projects. BlockBeats compiled the original text as follows:

People involved

Before I publish what happened to $ELE (@elecoinxyz), I will show evidence of most of the people involved in its creation and the final rug.

1. @0xkenzi Kenzi Wang: Partner of Symbolic Capital (psst, Google team), Polygon Consultant;
2. @jack_venture Jack Lu: Co-founder of Multibit and BounceBit, Partner of @NGC_Ventures ;
3. @sourcex44 Sanket Shah: Head of Strategy of Polygon Labs

4. Others not shown in the picture

5. Who could the name “Yuhua Kuku” be?

6. @0xsachi Sachi Kamiya: Founding team of Polygon Ventures, part-time venture capital partner of Symbolic, and dating Kenzi. Kenzi and Sachi are co-hosts of @0xbeaconpodcast

7. @mscryptojiayi Jiayi Li: GP of GeekCartel and co-founder of Salus security

8.@shawnc0825 Shawn Chong: COO of Salus Security and investor in BounceBit


These people seem to be mixed together.


Timeline


On January 3, 2024, a group of influencers gathered in a Telegram group to launch the meme coin on Polygon. However, the token generation event had already happened secretly in late December, and most of the supply had been captured by insiders. All developers and influencers were promised to be compensated (in the form of USDC) for their work.



The premise of the whole story is that Polygon founder @sandeepnailwal has a pet elephant, and they hope to make Elecoin popular by eventually showing photos posted by Sandeep with his pet. Sounds ridiculous, right? But people will happily buy anything weird in a bull market.



This is clearly supported by the "top" people at Polygon, who speak out their approval or disapproval of every move.



Soon after, the team started to aggressively push marketing, posting on X, tg chat, announcement channels, memes, the whole shebang. The goal was to reach 5000 followers as soon as possible.



The whole thing had red flags from day one, no small payments were made, developers paid for it out of their own pockets. Marketing paid for tg sentiments with the promise of payment later.



My involvement was a little later and on a smaller scale. A friend contacted me and asked if I could finish their site. I wasn't paid, but I agreed to help out, after all it's always good to have something nice in your pocket.



The person who authorized me to access the domain was none other than Kenzi Wang himself. Now I was skeptical, so for my friend’s sake I reached out to some VC friends to confirm that the tg account did indeed belong to Kenzi from Symbolic Capital (happy to at least have some good news).



There were a few more back and forth conversations here.



I got involved after the site was released, but I wasn’t removed from the group. What I observed over the next three months was a story that had been brewing for a long time. Rich people taking advantage of other people’s time and money. Non-payment, constant dumping, gas manipulation, and outright fraud.


Within a few days, some of the huge early wallets slowly started selling as the team pushed the narrative and worked hard on the project. A few thousand dollars a day, and constant reassurance that the project was solid, these only involved early snipers or hunters.



Next came Sandeep’s tag. It was a carefully planned set of steps, “approved by the Polygon team,” to grow the community by posting Sandeep’s tag and eventually getting him involved.



The team was promised that Sandeep and the rest of the Polygon staff would actively participate in the team’s work. Lo and behold, they did. From the first interaction, to the first reply, to turning his PFP into an elephant meme, the timing was impeccable.




It was all pre-planned (or so it seemed). The promise, the team’s instructions, how to make it look legitimate, and how to participate. Everything worked as promised, with some of the forwarded messages hiding the user’s account, just like Voldemort (you know, the Voldemort).




All the while, the sell-offs were ongoing, early wallets kept selling, while devs and KOL teams pushed the narrative day in and day out. Twitter space, airdrop events, raids, community engagement…


I watched how mem-coin gained critical mass



When the initial tg modding team hired didn’t pan out, some paid out of their own pocket to join a better team because they thought they would get paid anyway.



Meanwhile, the sell-offs continued. For nearly three months, the team worked on it like a full-time job, with the promise of compensation and the idea that they might catch up with the big project.



It kept going on and on, with constant selling from super early buyers, but no one could blame it on insiders because all of these wallets were freshly funded from CEXs before the purchase.



Then one night, someone broke through resistance and everything went haywire, and the whole thing went downhill. In less than two weeks, the market cap dropped from $17 million to under $2 million. After this, all the early wallet holders started selling and it was chaos. As expected, all the team members who worked for free were furious.



The Polygon team tried to get away with any blame by sending Sandeep’s “elephant photo”, which showed that this was a pretty bad scam from the beginning. The "pet elephant" was actually a rescued elephant, and Sandeep just made a small donation for its welfare (haha).



But like every Gooner, someone left a trail on the chain. It was none other than Shawn Chong and Jiayi Li. Seriously, how do these guys run a security company?



In response, Jiayi got super conservative and claimed that the insiders were selling because they had an internal fight. Now I don't want to spread any rumors, but these people really need to pull their hair out.



After dumping $5 on these developers, she went on to offer a $100 marketing budget, how generous!



After all this, @0xkenzi still had the guts to propose raising money for a meem coin fund. BTW, he has currently raised millions for a Crypto x AI project @sentient_agi , of which Sandeep is part of the team, which may also end up selling off at retail.



I would like to remind that @zachxbt has published a post about Kenzi and his former fund who threatened and abused the founders. Now he leads @symbolicvc , whose partner and co-founder is @sandeepnailwal .


And Jack Lu, the guy who keeps launching shit projects, from the ordinal multi-signature bridge project @multibit_bridge, to the scam startup platform @bounce_finance, to a centralized "BTC re-staking" platform @bounce_bit.



That's my short story, I witnessed the rise and fall of a memecoin, driven by greed, misdirection, exploitation and destruction, and to some extent lust. I can only publish this because developers and influencers are still angry that they never got paid!



It's frustrating to see influential executives and VCs use their positions to take advantage of serious developers and community members.


The web3 ecosystem will not reach its transformative potential if bad actors can mislead and defraud with impunity. We need to foster a culture of transparency, integrity, and respect. When powerful actors abuse their position, they must be held accountable.


Exploiting others for personal gain runs counter to the ethos this industry was built on.


As a community, we must do better. It starts with speaking out when we see misconduct, as the brave people did when they exposed this fraud here. But it can’t end there.


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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