Pepe was a cartoon frog which the younger generation latched onto as a meme. This is Pepe:
He had a few expressions, which young celebrities began posting online as a sign of how they were feeling. So when Katy Perry was happy, she would tweet this picture. It was like an inside joke, and those who knew this was Pepe would feel in, and those who didn't would find out so they could feel in too.
Fast forward, and some teenagers approached some leftist news organization and posed as members of the Aryan Nation's public relations wing. Anybody with a brain would have been like WTF? but not the media.
The kids said the Aryan Nation was going to demonstrate its power by taking Pepe from popular culture and seize it as their own mascot. They also said the Aryan Nation wanted to turn Taylor Swift into an example of the ideal Ayran princess which women should aspire to be. Totally stupid shit. And the media outlet ate it up, and did a big "expose" on how the Aryan Nation was now officially invading popular culture and seizing its memes.
Long story short, the young online right began posting Pepe cartoons, and he became an unofficial mascot of the online right, as a symbol of how gullible the left wing media was. But the left just saw Pepe, and said now the online right was embracing this "White Power Symbol" and the white power movement.
It got even stupider from there, and now Pepe's OK symbol is a sign of white nationalist pride, and anyone who makes it is signaling their membership in the Aryan Nation.
And Trump keeps making it as he talks, which the media is sure is a secret message to the KKK, but they are afraid to claim it openly.
Pepe's creator killed him off in the comic, because he felt he had become a symbol of "hate," but he is still around as a mascot, and he still drives the left bonkers, because now they think this was all a ploy to create a covert symbol of white nationalism that is ostensibly justified as a symbol of media stupidity, but which is still a super secret handshake symbol among KKK members.
There is a whole thing with the green frog symbol too, which some think is sort of a symbol of providence, but that is another story.
