The community exposes a big scandal about Polygon, with high-level control over meme coins to harvest retail investors?
The Polygon team attempted to absolve themselves of responsibility by releasing a photo of Sandeep's "pet elephant," but it turned out to be just an absurd scam.Source: Polygon Intern X account
Original author: Rahul | Polygon Intern (@Rahul__Ghangas)
Compilation: BlockBeats
Editor’s Note:
On May 21, community member Rahul | Polygon Intern (@Rahul__Ghangas) published a lengthy post on social media accusing Polygon's executives and insiders of manipulating a meme coin called $ELE, attaching numerous screenshots as evidence. The evidence involves not only Polygon executives but also projects and their leaders such as Symbolic Capital, Multibit, BounceBit, GeekCartel, and Salus Security. BlockBeats notes that these claims have not yet been verified and will continue to monitor the developments of the incident.
This incident has sparked considerable discussion in the crypto community, with crypto researcher @nake13 summarizing the "evidence" as follows:
Polygon's executives and insiders orchestrated the launch of a meme coin called $ELE, misleading and exploiting developers and community members, ultimately leading to the project's collapse. Key figures involved include Kenzi Wang, partner at Symbolic Capital and advisor to Polygon; Jack Lu, co-founder of Multibit and BounceBit; Sanket Shah, strategic head at Polygon Labs; and Jiayi Li, co-founder of GeekCartel and Salus Security.
The incident began on January 3, 2024, when a group of KOLs was gathered in a Telegram group to promote the $ELE meme coin. However, the token generation event had actually been secretly conducted at the end of December 2023, with most of the supply controlled by insiders. Developers and KOLs were promised USDC rewards for their work, but many warning signs appeared from the start, such as payment delays and out-of-pocket expenses.
The entire project revolved around a story about Polygon co-founder Sandeep having a pet elephant, which was merely a promotional gimmick. Insiders continuously sold off tokens while developers and KOLs worked day and night to promote the project, hoping for eventual rewards. After months of effort and deception, the project ultimately collapsed, plummeting from $17 million to $2 million, with all early wallets starting to sell off frantically, leaving developers and KOLs furious as they never received the promised rewards.
The Polygon team attempted to distance themselves from responsibility by releasing a photo of Sandeep's "pet elephant," which proved to be a ridiculous scam. Ultimately, the on-chain traces of Shawn Chong and Jiayi Li were revealed, and they argued that internal conflicts led to the sell-off, but the truth is they exploited their positions for fraud.
Details of the "Manipulation" Exposed
@Rahul__Ghangas pointed out how Polygon's senior management and other insiders misled and exploited developers over several months, using the meme coin as an excuse to gradually undermine the community. If proven true, this would imply that many memes could be created through the funding of top projects, high control, and KOL endorsements. BlockBeats compiles the original text as follows:
Involved Personnel
Before I publish what happened with $ELE (@elecoinxyz), I will present evidence of most of the people involved in its creation and eventual rug pull.
@0xkenzi Kenzi Wang: Partner at Symbolic Capital (psst, Google team), advisor to Polygon;
@jackventure Jack Lu: Co-founder of Multibit and BounceBit, partner at @NGCVentures;
@sourcex44 Sanket Shah: Strategic head at Polygon Labs
Other individuals not shown in the image
Who could be the tg name "Yuhua Kuku"?
@0xsachi Sachi Kamiya: Founding team of Polygon Ventures, part-time venture partner at Symbolic, and dating Kenzi. Kenzi and Sachi are co-hosts of @0xbeaconpodcast
@mscryptojiayi Jiayi Li: GP of GeekCartel and co-founder of Salus Security
@shawnc0825 Shawn Chong: COO of Salus Security and investor in BounceBit
These individuals seem to be intertwined.
Timeline
On January 3, 2024, a group of KOLs gathered in a Telegram group to launch the meme coin on Polygon. However, the token generation event had secretly occurred at the end of December, with most of the supply captured by insiders. All developers and KOLs were promised compensation for their work (in the form of USDC).
The premise of the entire story is that Polygon founder @sandeepnailwal has a pet elephant, and they hoped to generate buzz for Elecoin by eventually showcasing a photo of Sandeep with his pet. Sounds ridiculous, right? But people are willing to buy anything strange during a bull market.
It was clear that this had the support of Polygon's "top" individuals, who would comment on every move with approval or disapproval.
Soon after, the team began aggressively pushing marketing, posting on X, tg chats, announcement channels, memes, and the whole shebang. The goal was to reach 5,000 followers as quickly as possible.
From day one, there were warning signs, with no small payments being made and developers paying out of pocket. Marketing personnel were footing the bill for tg sentiment, promising payment later.
I got involved a bit later and on a smaller scale. A friend contacted me, asking if I could finish their website. I wasn't getting paid, but I agreed to help; after all, it's always good to have some nice things in your pocket.
The person who authorized my access to the domain was none other than Kenzi Wang himself. Now I was skeptical, so for my friend, I contacted some VC friends to confirm that the tg account indeed belonged to Kenzi of Symbolic Capital (at least I was glad to have some good news).
Here are a few back-and-forth conversations.
I got involved after the website was published, but I wasn't removed from the group. Over the next three months, what I observed was a long-simmering story. Wealthy individuals exploiting the time and money of others. No payments, constant sell-offs, gas manipulation, outright fraud.
Within days, as the team pushed the narrative and worked on the project, some large early wallets began to slowly sell off. Thousands of dollars daily, while constantly assuring that the project was reliable, involving only early snipers or hunters.
Next came Sandeep's tag. This was a carefully orchestrated step, "approved by the Polygon team," continuously tagging Sandeep to eventually involve him and grow the community.
The team was promised that Sandeep and other Polygon personnel would actively participate in the team's work. Look, they did it. From the first interaction to the first reply, to changing his PFP to an elephant meme, the timing was impeccable.
Everything seemed pre-designed (at least it looked that way). Promises, team directives, how to make it look reasonable, and how to get involved. Everything operated as promised, with some forwarded messages having user accounts hidden, just like Voldemort (you know, that Voldemort).
All along, the sell-off was ongoing, with early wallets continuously dumping while the developer and KOL team pushed the narrative day after day. Twitter spaces, airdrop events, raids, community engagement…
I observed how meme coins reached critical mass.
When the initially hired tg rebranding team failed, some individuals paid out of pocket to join a better team, believing they would get paid regardless.
Meanwhile, the constant sell-off continued. For nearly three months, the team worked on it like a full-time job, promising compensation, holding onto the hope of catching up with a big project.
The situation persisted, with continuous sell-offs from super early buyers, but no one could attribute it to insiders, as all these wallets had received new funds from CEX before purchasing.
Then one night, someone broke through the resistance, and everything spiraled out of control. In less than two weeks, the market cap plummeted from $17 million to below $2 million. After that, all early wallet holders began to sell off, and chaos ensued. As expected, all the unpaid team members felt furious.
The Polygon team tried to absolve themselves of all responsibility by sending Sandeep's "elephant photo," indicating that this was a pretty bad scam from the start. This "pet elephant" was actually a rescued elephant, and Sandeep only made a small donation for its welfare (haha).
But like every Gooner, someone left traces on-chain. None other than Shawn Chong and Jiayi Li. Seriously, how are these guys running a security company?
In response, Jiayi became super defensive, claiming that insiders sold off due to internal conflicts. Now, I don't want to spread any rumors, but these people really need to tone it down.
After selling these developers for $5, she continued to offer a $100 marketing budget, how generous!
After all this, @0xkenzi still had the audacity to propose raising funds for a meme coin fund. By the way, he has currently raised millions for a Crypto x AI project @sentient_agi, with Sandeep being part of the team, which may eventually also be sold off in retail.
I want to remind everyone that @zachxbt has already posted about Kenzi and his former fund in a post, where they threatened and abused founders. Now he leads @symbolicvc, whose partners and co-founders include @sandeepnailwal.
And then there's Jack Lu, the guy who keeps launching garbage projects, from the ordinal multi-signature bridge project @multibitbridge, to the scam launch platform @bouncefinance, to a centralized "BTC re-staking" platform @bounce_bit.
This is my brief story, witnessing the rise and fall of a memecoin driven by greed, deception, exploitation, and destruction, along with a degree of desire. I can only publish this because developers and KOLs are still furious about never receiving their rewards!
It is frustrating to see influential executives and venture capitalists exploit their positions to take advantage of serious developers and community members.
If bad actors can mislead and defraud without punishment, the web3 ecosystem will not be able to realize its transformative potential. We need to cultivate a culture of transparency, integrity, and respect. When powerful participants abuse their positions, they must be held accountable.
Exploiting others for personal gain is contrary to the spirit upon which this industry was built.
As a circle, we must do better. When we see misconduct, we must first speak out loudly, just as the brave individuals here have done to expose this fraud. But it cannot end there.
