February 28, 2022
Sotheby’s big NFT auction went from $30 million to zero in the blink of an eye on Wednesday night, February 23, reports Fortune magazine.
What exactly are NFTs? An NFT, which stands for non-fungible token, is a unique unit of data employing technology that allows digital content—from videos to songs to images—to become logged and authenticated on cryptocurrency blockchains, primarily Ethereum, Artnews says. Once content is logged onto the blockchain, every transaction from transfers to sales is recorded on-chain, creating an easily accessible ledger of provenance and price history. The main impact of NFTs is making it easy to own and sell digital content.
The auction house had planned the sale of a collection of 104 non-fungible tokens (NFTs) for up to an estimated $30 million at its New York City location on Wednesday evening. But 25 minutes after the auction was scheduled to begin, the consignor backed out of the sale, tweeting that he decided to “hodl,” or hold, on to the digital asset instead.
The anonymous collector who goes by 0x650d on Twitter then posted an aging 2015 Drake meme.
In the crypto world, Fortune notes, rug pulls or rugging are when a developer abandons a project after taking an investor’s funds.
The last-minute withdrawal of the collection of blockchain-based pixelated collectibles, otherwise known as CryptoPunks, shocked the Sotheby’s sale room according to a report by The New York Times, and deepened the valley between highbrow art institutions and the cyberpunk culture surrounding blockchain.
Sotheby’s spokesman Derek Parsons said in a statement on Wednesday night that “the lot was withdrawn prior to the sale following discussions with the consignor.” Other specialists told The New York Times that auction withdrawals typically happen when there are legal concerns or a fear that the reserve price won’t be met.
People in the NFT community are hurt and worried about credibility damage.
Others argue that Sotheby’s wasn’t rugged at all, but instead the collector 0x650d couldn’t clear the minimum reserve so he pulled out to save face.
Farokh.eth tweeted afterward, “It was embarrassing. For all of us in the space.”
On Reddit, user RdudeDdude posted, “It’s annoying to see how ‘successful’ these scammers seem to be. Regardless of whether they will get caught, it’s bad publicity.”
User XnoonefromnowhereX quickly retorted, “No one scammed here that I can see. Just a loss of face for Sotheby’s and this guy reinforcing some negative stereotypes about crypto culture.”
Others think this is a time of bubbles imploding. Still others made references to the approaching doomsday and whether or not any of this matters at all.
Research contact: @FortuneMagazine