Manchester City Forced to Intervene as Pudgy Penguins NFT Sparks India Backlash - 2026 Crypto Drama Unfolds

When a cuddly NFT collection collides with geopolitical tensions, even football giants get pulled into the fray. Manchester City's recent scramble to address the Pudgy Penguins controversy reveals how deeply Web3 culture has penetrated mainstream sports sponsorships—and how quickly digital assets can become diplomatic liabilities.

The Branding Blowback

Club officials reportedly held emergency meetings after Indian fans flooded social media, accusing the Pudgy Penguins project of cultural insensitivity. The NFT collection's expansion into Premier League partnerships suddenly looked less like innovative marketing and more like a reputational landmine. Sports franchises now walk a tightrope—chasing crypto revenue while dodging nationalist backlash.

Regulatory Reckoning

India's hardening stance on digital assets transformed what should've been a simple licensing deal into a compliance nightmare. Local authorities started scrutinizing the partnership through nationalist lenses, questioning whether foreign NFT projects should have such prominent visibility in domestic sports. Suddenly, those cute penguins carried more political weight than their 8-bit designs suggested.

The Sponsorship Shakeup

Insiders whisper about contract clauses being renegotiated in real-time. Manchester City's legal team reportedly worked through the night adjusting promotional schedules and community engagement plans. The club's previous Web3 enthusiasm now meets sober reality: crypto partnerships require crisis management playbooks.

Market Reactions

Trading volumes for Pudgy Penguins dipped 18% during the controversy's peak—proving once again that in crypto, even the most established projects remain one bad headline away from valuation turbulence. Traditional sports brands are learning what crypto natives already know: decentralization doesn't mean immunity from centralized backlash.

As football clubs and NFT projects navigate this new terrain, the Manchester City episode serves as a cautionary tale. The beautiful game's marriage with blockchain technology continues—but with prenuptial agreements getting longer by the day. After all, nothing says 'financial innovation' like needing a Premier League club to mediate your international relations.

Manchester City forces Pudgy Penguins to apologize for mocking India

Dan Sickles, director of the NFT documentary project New Here, said Pudgy Penguins was “trafficking in base, xenophobic, colonial humor,” owing to how its American marketing team runs similar engagement farming campaigns like InfoFi. 

“I’ve met their guy, he’s great at his job, and he’s not from Mumbai,” Sickles said, referring to the project’s social media manager.

The backlash first began when an X user and Offline protocol developer named Satvik reported the post to Manchester City. Satvik said he took it up with the club after other users attempted to minimize the issue and deemed it harmless.

“Everyone commented on his post that it’s not serious and it wasn’t racism, let’s let the partners decide for themselves. I’m fucking tired of how normalized racism against Indians has become on this platform. Every single day we endure hurtful comments for simply existing online,” he complained.

Satvik later shared an email response he received from Manchester City, which read: 

“We have raised this directly with the company, and they have since responded to the club, acknowledging that the tweet was inappropriate and does not reflect its company values. They have also removed the tweet from their channels. They have offered to reach out to you directly and share their statement, express their apology on the matter.”

According to the programmer, Pudgy Penguins’ CEO Lucas Netz should be “incredibly ashamed” of his team for allowing the post to be published. As of the time of writing, neither Netz nor the company had issued a public apology on their own channels.

Racism is well and alive

You guys should be incredibly ashamed of your team putting out content like this @LucaNetz @chefgoyardi https://t.co/C6dPm2SJmK

— satvik (@sxtvik) January 15, 2026

Satvik later quoted his original post and said he wanted clarity on how Pudgy Penguins intended to prevent another xenophobic statement from being made. He wanted to hear what company policies Netz will enact “to prevent incidents like this from happening again, and for him to condemn xenophobia and racism more generally.”

“I’d also love to hear why the post stayed up so long despite people sharing feedback immediately,” he continued.

PENGU token drops 3.7% in 24 hours

The price of Pudgy Penguins’ token, PENGU, jumped by 5% after the project announced its partnership with Manchester City on January 15. But the rally proved short-lived as traders began taking profits soon after the announcement. 

PENGU has since fallen below $0.01, a drop of about 16% and a weekly plunge of 20%, coinciding with the community backlash over its now-deleted X post. Moreover, market participants believe that factors like the fading of the speculative interest after the partnership news was fully absorbed caused a negative price correction on the token.

According to its press statement, the Manchester City partnership debuted a premium digital collectible and merchandise for the football club’s fans. Yet, some netizens noted that Pudgy Penguins’ social media presence clashes with its family-friendly branding. 

While the brand markets itself through child-oriented products, its online posts frequently lean into trending topics in finance and technology, sometimes using edgy or provocative language to drive engagement, much similar to what InfoFi influencers and projects do. 

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