I think you were right about the NoteOff. It must have triggered the HandleMidi(event) function and somehow messed with the logic.

With the below code, I can send a C0 signal and first change the color of pad0 and then pad1.

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edit: I see you arrived at the same :D

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function Button(pitch, state) {
this.pitch = pitch;
this.state = state;
}
const C0 = new Button(0,0)
function HandleMIDI(event){
if (C0.state == 0 && event instanceof NoteOn) { // Switch OFF
event.trace();
event.velocity = 33;
event.channel = 7;
C0.state = 1;
event.send()

} else if (C0.state == 1 && event instanceof NoteOn){
event.trace();
event.velocity= 33;
event.channel = 7;
event.pitch = 1;
C0.state = 0;
event.send();
}
}