An NFT Just Sold for $532 Million, But Didn't Really Sell at All 81
A white-haired, green-eyed pixelated character known as a CryptoPunk 9998 just sold for more than half a billion U.S. dollars -- or so it appeared -- the latest wild development in the booming non-fungible token space. But the Ethereum blockchain shows the money from the NFT trade ended up right back where it started, raising the question of why anyone bothered. Bloomberg reports: The process started Thursday at 6:13 p.m. New York time, when someone using an Ethereum address beginning with 0xef76 transferred the CryptoPunk to an address starting with 0x8e39. The process started Thursday at 6:13 p.m. New York time, when someone using an Ethereum address beginning with 0xef76 transferred the CryptoPunk to an address starting with 0x8e39.
To pay for the trade, the buyer shipped the Ether tokens to the CryptoPunk's smart contract, which transferred them to the seller -- normal stuff, a buyer settling up with a seller. But the seller then sent the 124,457 Ether back to the buyer, who repaid the loans. And then the last step: the avatar was given back to the original address, 0xef76, and offered up for sale again for 250,000 Ether, or more than $1 billion.
Larva Labs, which created the CryptoPunks, said on Twitter that "someone bought this punk from themself with borrowed money and repaid the loan in the same transaction." Evidently, this isn't the first time this has happened. "Some recent large bids were done the same way. The ether is offered and removed in a single transaction. So, while technically briefly valid, the bid can never be accepted. We'll add filtering to avoid generating notifications for these kinds of transactions in the future." In conventional, regulated securities markets, this would be called wash trading, which is banned on grounds that trading with yourself can artificially inflate prices and suggest more demand than really exists.
To pay for the trade, the buyer shipped the Ether tokens to the CryptoPunk's smart contract, which transferred them to the seller -- normal stuff, a buyer settling up with a seller. But the seller then sent the 124,457 Ether back to the buyer, who repaid the loans. And then the last step: the avatar was given back to the original address, 0xef76, and offered up for sale again for 250,000 Ether, or more than $1 billion.
Larva Labs, which created the CryptoPunks, said on Twitter that "someone bought this punk from themself with borrowed money and repaid the loan in the same transaction." Evidently, this isn't the first time this has happened. "Some recent large bids were done the same way. The ether is offered and removed in a single transaction. So, while technically briefly valid, the bid can never be accepted. We'll add filtering to avoid generating notifications for these kinds of transactions in the future." In conventional, regulated securities markets, this would be called wash trading, which is banned on grounds that trading with yourself can artificially inflate prices and suggest more demand than really exists.
Obvious reason ... (Score:5, Insightful)
But the Ethereum blockchain shows the money from the NFT trade ended up right back where it started, raising the question of why anyone bothered.
Pump and dump.
Next year: tulip bulbs.
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.. is obvious.
To some of us.
Pump and dump
How does that work? He both pumped and dumped simultaneously, breaking even?
IT IS OBVIOUS
This is money laundering. The seller now has records (sale of an NFT) for that pile of money he has. The buyer will remain "anonymous"
Re:Obvious reason ... (Score:4, Interesting)
How does that work? He both pumped and dumped simultaneously, breaking even?
/
He pumped the market; there's a record of those Crypto Punk NFTs selling for hundred of millions of dollars. The thing is, there was never a sell (not even a proper money transfer) involved; IIUC the entire transaction happened within a single Ethernet block.
Normally i'd assume people not to be stupid enough to fall for this, but this is the NFT crowd we're talking about.
Re:Obvious reason ... (Score:5, Funny)
Ethereum, not Ethernet, you stupid phone :)
I really hope... (Score:1)
....they charge sales tax on his ass.
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Re:Obvious reason ... (Score:4, Insightful)
How does that work? He both pumped and dumped simultaneously, breaking even?
Okay, I'm a layperson, but I believe I have adequate understanding. Okay, in a "pump and dump" scam, performed with stock, what they do is buy a bunch, normally of a small cap company(penny stocks), so your transactions cause a visible price increase. Just before or during you doing this(the actual timing is critical and somewhat tricky), you release an ad blitz going on about how the stock price "is going to skyrocket". So people go to check out the stock, and see it's price increasing(from you buying), and start buying as well. This drives the stock price up more. Of course, at somewhere near the peak, you start selling your shares, hopefully making a good profit, while leaving hundreds of other investors holding the (actually nearly) worthless stock that they paid an inflated price for. Wash sales, if allowed, could be used to further increase transaction volume and price, because you get to set a high price for your stock, then sell it for that price, it becomes recorded as the latest Spot price, which is something people look at when assessing stock.
In this case, what they would be doing is attempting to get "NFT sold for $BIG MONEY$" in the news so that more people start getting into the market for NFT, and thinking that it's actually worth it, buy NFT of that type, of which the Pumper presumably owns more of, at higher prices, the "dump" part. It'd be no different than if, let's say we have "Artist X" who just sold a painting for $20M. Now, secretly he sold it to himself, using theoretical money borrowed "for a moment", and didn't use an auction house that takes a percentage cut. So it maybe cost him $20 to record the sale.
Now other people see on the news that X sold a painting for $20M, and see that they can pick up paintings of his for a "mere" $100k, and they do so, where they wouldn't have before.
What the? "Your comment looks too much like ascii art"? How the heck do I even fix that? (Grumbles, it doesn't like five $ in a row rather than $BIG MONEY$)
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What the? "Your comment looks too much like ascii art"? How the heck do I even fix that? (Grumbles, it doesn't like five $ in a row rather than $BIG MONEY$)
Thats because we made the mistake of flaming the staff of this site for being too incompetent to do simple things like stop ascii art spam.
We didnt realize that people too incompetent to do it, wont become competent when you flame them. We flamed them. They produced the worst filter imaginable. Complete. Fucking. Incompetence.
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Home brewed comment filters never work out well. I ran a site in the early 2000s that got a LOT of aggressive spambots , and we constantly where trying to code our own spam filters.
And then one day we just hooked it up to akismet and blam, problem solved.
Moral of the story: Just get it off the shelf, let someone else sweat the details
Re: Obvious reason ... (Score:2)
Re:Obvious reason ... (Score:4, Informative)
Wash trading is pump, the dump got later.
Hell even if it is now known this was wash traded, this NFT is now famous for being part of the largest wash trade to date ... so that raises its value in and of itself.
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this NFT is now famous for being part of the largest wash trade to date
Sad upvote :( Someone will pay real money for it soon.
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this NFT is now famous for being part of the largest wash trade to date
Sad upvote :( Someone will pay real money for it soon.
You should make a screenshot, then NFT of it ... :-)
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:) https://i.redd.it/8cdvwb5kfss7... [i.redd.it]
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Maybe to you.
In which case you're a crypto scammer's dream.
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It might be money laundering or it might be just plain "fraud" in the sense that it gives the market a false sense of value for the item in question. Similar behavior is going on with video games too and that does not seem to be money laundering: https://www.youtube.com/watch?... [youtube.com]
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It might be money laundering or it might be just plain "fraud" ...
Does anyone receive a fee, or otherwise make money, for processing transactions like this?
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Part of the issue is we don't know who the players are.
Imagine if eBay bought rare items at 1x and then listed items at 10x prices and then eBay itself bought those items . No fees beyond server room costs. Then eBay lists the items again for 5x the price and shows a history of "last bought at 10x, this is a deal!" If you can get a sucker then you make 5x or 10x. Ideally you own lots of inventory so if the demand snowballs you can sell it all at 5x. However, this is only one way to make money.
Imagine eB
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At least you could eat the tulips when the whole thing came crashing down.
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At least you could eat the tulips when the whole thing came crashing down.
Tulips contain alkaloid and glycoside compounds that are toxic and are concentrated in the bulb. Eating tulip bulbs can cause dizziness, nausea, abdominal pain and, rarely, convulsions and death. I’m assuming this would pair well with financial ruin.
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The toxicity is concentrated in the core of the bulb. If the core is cut out, the rest of the bulb can be eaten.
Tulip bulbs were eaten during the Dutch Hunger Winter of 1944 [wikipedia.org] when Hitl*r cut off the food supply in the aftermath of Operation Market Garden.
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If the core is cut out, the rest of the bulb can be eaten.
That sounds like a stupid idea unless actually dying of starvation. Now be a good chap and pass the fugu.
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Because of shiny new technology, we think this is a shiny new scam. It this is the same same scam we say in Lovejoy.
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It's a wash... (Score:5, Informative)
It's called a wash trade [wikipedia.org], and it's illegal.
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It's illegal when done with regulated securities like stocks and such.
NFTs are not regulated, and wash trades happen with it and other markets all the time perfectly legally. The art market is generally considered to be a huge wash market where self-interested parties ensure that paintings intentionally sell for higher than they would to ensure that the value of their holdings don't dip.
It's been shown that the videogame market is showing signs of this as well wher
Don't forget money laundering (Score:2, Informative)
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Pump and dump.
It's possible, but I'm guessing the scam is different. Given this has happened multiple times, I suspect a person is is setting up a situation where they "borrow" a large some of money - and walk with it. They're just running a feasibility experiment, looking for a workable angle.
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It's a pretty good bet that it's not just pump and dump... money laundering is probably involved too.
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The answer is right in the summary.
The interesting part: someone who has or at least can "borrow" cryptocurrency theoretically worth half a billion dollars is engaging in these shenanigans. Is it really a good idea to put so much capital in such hands?
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Is it really a good idea to put so much capital in such hands?
Where were you with this question before 2007?
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Congratulating myself for buying Apple stock instead of Pets.com.
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yup. This establishes a baseline price. Though the tax implications might be interesting.
If this were the stock market... (Score:3)
...people would've already been charged for wash trading. One of the perks of lack of regulation, i guess.
Yes, but if this were the stock market... (Score:3)
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Cool! So, the SEC has already filed charges i guess?
Re:Yes, but if this were the stock market... (Score:4, Informative)
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Holy shit.
Dude, the fact that a scam is more or less obvious doesn't make it less of a scam. Wash trading schemes were not exactly sophisticated back in the day either.
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I'm no crypto evangelist. You can hate many things about crypto and still recognize some of the advantages.
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They are allowed to decide that there are other, more important things, they could be doing.
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So, the advantage of a market which makes these kind of shenanigans trivial, with zero regulation, is that it is also completely open about it?
I don't think you're making as much sense here as you think you do.
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The only reason anyone knows anything about it is because the person responsible had to reply the loan. There was some research a while back that suggested the majority of cryptocurrency "trade volume" was just big players passing coins between their own networks of wallets in order to give an illusion of legitimacy.
But sure, "transparent ledger."
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Wash trading is illegal for commodities too, as far as I'm aware.
Re:If this were the stock market... (Score:4, Informative)
Wash sale rules apply only to stock and securities, not crypto assets. There have been some talks about regulating these markets better come 2022, but nothing concrete so far.
Happened years ago with cash (Score:5, Interesting)
Then the bank figured out why. They were giving free air miles for cash withdrawals. That couple got thousands and thousands of air miles
Re: Happened years ago with cash (Score:2)
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This is a kind of arbitrage and perfectly legal! It also happened back in the 80s or early 90s when credit card companies issued check-like instruments that were backed by loans against your CC. Believe it or not, there was a time when people preferred a paper-check like deal. Initially, the "checks" were subject to the same rules as ordinary charges. If you paid back what you borrowed before the grace period, there was no interest. Interest was actually decent back then. You could get a 5% money mark
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This isn't terribly relevant, but certain businesses still prefer paper checks. They're more efficient than EFT methods in use today, or CCs.
CCs and EFTs can charge a sizable percentage of the overall amount of the transaction as "fees" ( I've seen it up to 10%, but around 5% is common ). For paper checks, on the other hand, the amount on the check is the amount deposited. Sure, there's some overhead inherent in that 'deposit' process, but unless you are completely ridding yourself of having to go to the
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You guys should upgrade your banking system. Our electronic transfer fees are somewhere in the range of 1 to 4 cents per transaction. Some banks are a holes and charge a buck, but the decent ones don't bother charging anything.
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The federal government fell for this. You could order dollar coins, and pay for them with a credit card, and they would be delivered for free. People did this, and then deposited them to pay off the credit cards, racking up tons of airline points or cash back awards before the treasury discontinued the program.
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A couple took out their live savings at a cash machine. Walked back into the. Bank, paid the cash back in. Drew the money out, paid it back in. All in all seven million dollars.
I want documentation on this. I've always understood there was both a single transaction and daily limit you could withdraw from an ATM. Something around $300. I find it difficult to believe they did seven million dollars in anything approaching a short period of time.
Shocking (Score:1)
Someone is using cryptocurrency in a fraudulent way? Colour me shocked.
Presumably if some sucker had outbid them we'd never have known?
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I know the NTF market is end-to-end batshit crazy, but i just can't see anyone paying half a billion dollars for horrible pixel art.
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NFTs may even be a good technology in the long run, but that doesn't mean scammers won't take advantage of the loopholes in the regulations early on
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When you say "NFTs may even be a good technology in the long run", I have to ask "Good for what?".
IIUC NFTs depend on a remote server to validate their uniqueness. So what happens if that server goes down, or gets compromised?
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You have a point, that I don't know much about blockchain. But there are already cases of bitcoins being transferred without permission (as well as just lost), so I think my point stands, even if the exact mechanism I proposed is invalid.
Re: Shocking (Score:2)
:) we collectively give up trying to explain this topic to you. Please take it on faith and have mercy on our souls dear sir
Not that most of us dont think NFTs are the biggest stupidity of this decade!
But probably something useful will evolve out if it, for eg seamlessly authenticating documents all across the world or some other shit. It always does.
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So.. (Score:2)
clearly since nothing sold for no amount of money, an article about it is essentially about nothing and shouldn't even be on here. At least most articles have SOMETHING to say.
Somebody is using NFTs for scammin'!? (Score:2)
Oh no, say it ain't so!
money lanudering - why doesn't the FBI investiage? (Score:2)
money laundering? (Score:2)
Taxes (Score:3)
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Unless they are in a country with no capital gains tax.
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Nah. They immediately took a $532 million loss.
Also, those $ are all in unrealized theoretical cryptocurrency valuation.
NFT's are another SCAM (Score:1)