Key Takeaways

• Month old project Pudgy Penguins has become the top traded collection on NFT marketplace OpenSea.
• The project has encountered controversy, with some accusing one of the founders of being a scammer.
• However, interest in the project looks genuine and demand for pudgy penguin NFTs continues to grow.

Are pudgy penguins just another elaborate money grab hustle freeriding the NFT hype train or a legitimate project seeing well-deserved success? While some high-profile influencers in the space warn that the project may be a pump and dump scheme, others brush off the concerns, arguing “they’re just the cutest memes on the internet.”
Unpacking the Penguin Hype
Pudgy penguins are taking over the metaverse by storm. 
“Located in the freezing cold, arctic region of the metaverse you can find 8,888 cute chubby Pudgy Penguins sliding around on the ETH blockchain.” — If you were wondering what Pudgy Penguins is, this is it. That’s the project’s entire pitch. And there’s really nothing more to it. It’s jpegs of chubby penguins minted as unique non-fungible tokens (NFTs) recorded on the Ethereum blockchain. The highest recorded sale for a single one of these penguins is 150 ETH or about half a million dollars at current prices. Now the same penguin is listed at 500 ETH, equal to $1.6 million.
The current floor price for a single pudgy penguin NFT is 2.16 ETH or roughly $7,000, and in the last seven days alone, the project surpassed $53 million in trading volume, overtaking Crypto Punks to become the top traded collection on NFT marketplace OpenSea.
So, what gives? Why is everyone on Crypto Twitter suddenly so obsessed with pictures of penguins? Is it because they’re rare? If so, then so are countless other NFT collections, some even rarer, so why pudgy penguins specifically? Is it because they’re so cute? Sure, they’re cute, but half a million-dollars for a tokenized jpeg cute? Debateable. 
Or is it all perhaps an elaborate, influencer-orchestrated get-rich-quick scheme? Several high-profile crypto traders and NFT collectors took to Twitter last week to warn penguin connoisseurs that the whole thing looked sketchy and prices might be heavily manipulated.

One of the founders and leading members of the Pudgy Penguins team, ColeThereum, also came under heavy fire on Twitter for allegedly being “an opportunist who deceives people.” The NFT community dug into his past and discovered that COLE ran a suspicious dropshipping business flooded with negative reviews and comments from dissatisfied customers before joining the crypto space.

4/ Why the negative reviews you might ask?

The comment and review sections are filled with instances of customers not receiving orders, refunds, or responses from support.

Note he deleted the Instagram page today after he got called out. Luckily the Facebook page was there. pic.twitter.com/GOv6juNXL0

— Zach (@ZachXBT) August 11, 2021

To make things worse, COLE was also caught red-handed faking an NFT giveaway to promote a popular NFT project called FameLadySquad. Specifically, he said he’d give away Lady #500 to a random person who followed and retweeted his post but he never did, even posting the same NFT for sale on OpenSea days later. After being called out on Twitter, COLE further admitted to shilling random NFT projects for money without disclosing he was being paid to do so.

The question bugging NFT collectors now is whether one person’s mistakes are enough to discredit the whole project. While COLE admittedly made some mistakes in the past, this doesn’t prove that Pudgy Penguins is a scam or a pump and dump scheme. To the point, there’s no evidence anybody participating in the project got scammed in any way, and $54 million in weekly trading volume can hardly be attributed to an influencer-orchestrated pump and dump scheme.
The overwhelming majority of the Pudgy Penguins community loves the project and doesn’t seem too bothered by COLE’s past actions.

Hilarious that people think @pudgy_penguins are a pump and dump. Uhh no dude they’re just the cutest memes on the internet!

— Adam Levy🍌 (@Roothlus) August 11, 2021

While Pudgy Penguins’ rise in popularity looks genuine, the unanswered question remains: for how long? Pudgy Penguins NFTs are hardly any different from other animal-based NFT avatars, and judging by how quickly they overtook more established projects like Crypto Punks and Bored Apes, nothing suggests Pudgy Penguins can’t be replaced by another NFT project just as easily.
Disclaimer: At the time of writing this feature, the author owned Ethereum.