Coinbase (COIN) flagged the growth of pepecoin (PEPE) and Bitcoin-based meme coins in its latest newsletter on Wednesday.

After a significant drop in the crypto market traders are hunting for profits by focussing on jokes instead of fundamental plays, which has contributed toward extremely large gas fees on the Ethereum blockchain.

Last week saw trading volume on meme coins jump to $2.3 billion, more than six times higher than the week prior, and the highest level since May 2021, Coinbase said in the newsletter.

The newsletter noted that the ongoing meme coin mania was led by the rise of PEPE, which has grown nearly 55,000% since its issuance in mid-April – running to a $1.8 billion market capitalization in just under three weeks to become one of the fastest-growing tokens of all time.

It also tracked the growth of Bitcoin-based meme coins following the introduction of the Bitcoin Request for Comment (BRC-20) token standard, which allows developers to issue tokens directly on the Bitcoin blockchain.

However, most of these tokens turned out to be meme coins and reached a cumulative market capitalization of $1.8 billion earlier this week.

Pepe meme’s use by political groups

However, the newsletter riled up some Crypto Twitter community members by pointing out that the Pepe the Frog meme that serves as the mascot for pepecoin has been used in racist ways on the internet.

“The token is based on the Pepe the Frog meme, which first surfaced on the internet nearly 20 years ago as a comic-strip character,” the Coinbase newsletter said. “Over time it has been co-opted as a hate symbol by alt-right groups, according to the Anti-Defamation League.”

Although the newsletter has a disclaimer that distances its author and does “not necessarily reflect the views of Coinbase or its employees,” the sentence became the centerpiece of Crypto Twitter commentary.

The Anti-Defamation League notes that although the meme has proliferated on controversial internet forums 4chan and 8chan, both of which are associated with alt-right politics, “the majority of uses of Pepe the Frog have been, and continue to be, non-bigoted,” it states on the ADL website.

Pepe community fumes

“$pepe is not a hate symbol!,” tweeted one @Pauly0x, a prominent PEPE supporter.

“I will be closing my personal and business accounts with @Coinbase and moving them to @Gemini. #PEPE IS NOT A SYMBOL OF HATE,” tweeted @OG_Kenobi_Hello, another PEPE supporter.

“The $pepe movement is about love, equity, & a protest against VC-backed entities/influencers that have been criminally taking advantage of the web3 community for the past 2 years,” @OG_Kenobi_Hello further added.

The term “#deletecoinbase” was trending on Twitter during Asian morning hours on Thursday.

UPDATE (May 11, 2023, 14:11 UTC): Adds context from Anti-Defamation League’s statement on Pepe the Frog.

Edited by Parikshit Mishra.