Pudgy Penguins Removes Controversial Post After Manchester City Complaint, PENGU Drops 11.42%

Pudgy Penguins removed a post that many users described as xenophobic and harmful according to reports. The post implied that India's economy could be significantly impacted by X's measures to combat spam, drawing criticism for its stereotyping. Manchester City, as a partner, raised concerns and requested the post be taken down.

The controversy led to increased scrutiny of Pudgy Penguins' social media practices. Pudgy Penguins has acknowledged the post was inappropriate and has since deleted it. The company plans to apologize to the user who flagged the content .

Pudgy Penguins faces regulatory challenges as the U.S. SEC has delayed its decision on the project's ETF application until March 11, 2026. The delay is attributed to concerns around custody and valuation. Institutional investors continue to accumulate PENGU, indicating some confidence in the project's long-term potential.

What Happened and Why It Matters?

The post in question was interpreted as relying on stereotypes about Indian users being associated with bot spam. This led to backlash, with some users accusing Pudgy Penguins of engaging in xenophobic humor. Manchester City played a key role in addressing the issue after being contacted by the user who flagged the post.

Pudgy Penguins' press office confirmed that the post did not reflect its company values. The brand has since removed the post and plans to reach out to the user who reported it. The incident highlights the importance of social media governance and brand reputation in the crypto and NFT spaces.

Market Implications and Risks?

The price of PENGU dropped 11.42% on 2026-01-19, trading below its 20, 50, and 200-day moving averages. This indicates ongoing selling pressure and investor concerns over the brand's management. Despite the drop, some institutional investors continue to accumulate PENGU, showing resilience in the face of short-term volatility.

The U.S. SEC's decision on the ETF is now scheduled for March 11, 2026. This delay adds regulatory uncertainty for Pudgy Penguins and its token holders. New partnerships with Manchester City and MapleStory N aim to expand the utility of NFTs into gaming and physical merchandise.

Strategic Shifts and Future Outlook?

Pudgy Penguins has pivoted toward a phygital model, integrating physical toys with digital assets. This strategy includes partnerships with major retailers like Walmart and Target. Community governance has also been emphasized, allowing NFT holders to participate in character submissions and earn royalties.

OpenSea has also introduced Soulbound Tokens (SBTs) to enhance utility and community recognition. These initiatives aim to shift the NFT market from speculation to value creation. Pudgy Penguins' partnerships with brands like Lufthansa and NASCAR provide real-world utility for the PENGU token.

The broader market remains cautious about the project's ability to recover from recent setbacks. While new partnerships and regulatory clarity are positive indicators, long-term success will depend on maintaining a strong brand image and delivering tangible value to its community.

Brand Image and Community Response?

The incident underscores the importance of brand reputation in the NFT space. Pudgy Penguins has faced criticism for its sometimes controversial social media presence. The response to this latest controversy highlights the need for better governance and community engagement.

Despite the setbacks, Pudgy Penguins has shown resilience through community-driven initiatives and strategic partnerships. The project's focus on phygital utility and real-world applications suggests a long-term vision for growth. However, the recent price drop and regulatory delays serve as reminders of the risks associated with brand missteps and market volatility.