Far more than hype, plagiarism, internal ghost fraud behind the NFT ebb tide, its “N original sins” appear

Along with the previous NFT boom, there have been one after another industry chaos.

In the eyes of many people, 2021 is a well-deserved first year of NFT.

This year, Twitter founder Jack Dorsey’s first tweet NFT was sold for $2.9 million, artist Beeple’s NFT works were sold for a sky-high price of 69 million, and top projects such as Boring Ape and Cypherpunk swept the market; this In 2018, capital, celebrities, and large companies entered the market one after another. The annual sales volume of the NFT market was as high as 24.9 billion US dollars. The original niche NFT track broke the circle with a market valuation of more than 40 billion, attracting millions of ordinary people. People start the “gold rush”.

But how fierce the tide of NFT is, the speed at which it ebbs and the controversy it suffers.

More than a month ago, Jack Dorsey’s tweet NFT was listed for sale again. Although the expected price was $48 million, the highest bidding price after the first round of quotations was only a mere $280. It’s not the tweet that’s the problem, it’s that the entire NFT market is in full swing. Last month, the transaction volume of the NFT market plummeted by more than 90% compared to the high point in September last year, and the prices of a large number of NFT projects have plummeted recently and continue to penetrate the floor.

Far more than hype, plagiarism, internal ghost fraud behind the NFT ebb tide, its "N original sins" appear

Auction of Jack Dorsey’s Tweets on Opensea

A large number of previously famous NFT projects have been “fallen out”. American rapper and media personality Snoop Dogg’s NFT sold for $32,000 in early April, and the NFT is now being auctioned off with an asking price of $25.5 million, which has since dropped to $16.35 million, but as of now The highest bid was only about $1850.

The cooling of the market is only a symptom. As the hype of NFT reaches its peak and the transaction scale expands rapidly, people also find that there are too many irregularities and uncertainties in the “savage growth” NFT market.

Fraud and plagiarism, system loopholes, platform insider trading and other problems have emerged one after another. While the NFT trading platforms represented by Opensea are making a lot of money, more and more industry insider scandals are also emerging. surfaced recently.

Original creator’s anger: ‘One-of-a-kind’ digital collection comes from plagiarism

The most important reason why NFT can quickly get out of the circle in a number of Web3 tracks is that it has the characteristics of verifiability, uniqueness, inseparability and traceability , which makes NFT applicable to a wide range of scenarios and can solve real problems. There are a lot of issues of ownership in life.

The first place where NFT “made a fortune” was in the art field where the ownership problem was the most prominent. A painting, a piece of music, a video can now exist in the form of NFTs. Creators will directly own the ownership of their own works, so there is no need to worry about fake products becoming popular, and there will no longer be middlemen to make the difference.

But is this really the case?

As NFTs become more and more hyped, a large number of incidents of plagiarism and theft of works have been exposed one after another recently.

Recently, some American musicians have collectively attacked the music website HitPiece on social media, blaming the website for selling their music works as NFTs without their permission. On OpenSea, the world’s largest NFT market, some artists’ works are also mass-produced as NFTs by anonymous users for sale.

Dutch artist Lois van Baarle searched her name on Opensea to find more than 100 pieces of her artwork for sale, none of which were minted by herself; American artist Aja Trier without any NFT operations herself , found nearly 90,000 NFTs based on her IP work on OpenSea.

Far more than hype, plagiarism, internal ghost fraud behind the NFT ebb tide, its "N original sins" appear

Image via Aja Trier Twitter

“My work has been plagiarized before, but there has never been such a large-scale and blatant plagiarism before NFT.” Aja Trier said in an interview.

The emergence of this situation has a lot to do with the “lazy minting” mechanism of Opensea and other NFT trading platforms. In order to attract more people to enter the NFT market, OpenSea allows users to list NFTs for sale without writing the NFTs to the blockchain. The sellers do not pay fees before the NFTs are sold. The creation process only takes a few clicks. can be completed.

This has made many speculators want to list as many works as possible, and they have even invented an automated bot that crawls online galleries of artists online, searches with keywords on Google Images, and then automatically generates NFT works.

Recently, DeviantArt, a group of artists, scanned millions of NFTs that are being sold publicly and has found more than 290,000 instances of unauthorized plagiarism.

The core problem behind this is, who is the first to upload the work to the blockchain as the standard for NFT’s originality confirmation, but the first to cast the work into NFT and upload it to the blockchain is not necessarily the creator of the work.

“Many people say that the arrival of NFTs is a boon for creators, but in terms of the experience of me and many people around me, it is also a nightmare. Our works are permanently stored on the blockchain, but it does not belong to I, the plagiarist and the trading platform bear almost no responsibility,” Aja Trier said.

Immature NFT Networks: Assets Are Missing, Insider Trading Is Awash

The unregulated NFT market angers not only the original creators, but also many NFT investors.

Opensea is currently the world’s largest NFT trading platform. Users can mint NFTs on this platform, and can also trade and auction various types of NFTs including pictures, music, games, and even physical assets. In simple terms, Opensea is like a Taobao that specializes in selling NFTs, except that everyone trades digital virtual assets.

However, as a young trading platform that has only been established for more than 4 years and suddenly ushered in a peak last year, the Opensea system is currently not stable and secure enough, and insiders are even engaged in insider trading.

New York federal prosecutors and FBI investigators have arrested Nathaniel Chastain, a former product manager at OpenSea, on charges of wire fraud and money laundering related to NFT insider trading, according to the U.S. Department of Justice on June 1. If convicted, he will be sentenced to the highest 20 years in prison.

The former OpenSea product manager was previously tasked with sifting through NFTs that landed on the site’s homepage. Nathaniel Chastain took advantage of the anonymity mechanism of NFT market transactions. From June 2021 to September 2021, he used an anonymous account to buy these NFTs to be listed in large quantities, and after these NFTs officially landed on the web page, they bought two NFTs of the purchase price. Sell ​​to triple the price and arbitrage from it.

This is the world’s first arrest for NFT insider trading, and it also makes many NFT investors panic. Because insider trading is too common in the NFT industry.

Generally speaking, the rarity of a new NFT series will not be known to the average investor until it is listed or minted on an exchange, but the development team has this information. As a brand new investment product, the information disclosure mechanism of NFT is not as complete as that of the securities market. With the blessing of blockchain technology, many development team members often use anonymous wallets to purchase rare NFTs in advance, and later Profit from public sale.

In this regard, U.S. Attorney General Damian Williams made it clear that “NFT trading may be new, but this type of crime is not new. We will absolutely prohibit the existence of insider trading, whether it occurs on the stock market or the blockchain. middle.”

In addition, in addition to internal troubles, Opensea has also been targeted by hackers.

Not long ago, a holder of a boring ape NFT work filed a lawsuit against OpenSea in a Texas federal court, arguing that Opensea’s system vulnerabilities caused his NFT to be stolen. This is the first formal legal action involving a security breach in OpenSea, but behind it, a large number of similar victims have already emerged.

Since January this year, many users said that their wallets were illegally invaded by hackers, and the NFTs in their wallets were listed for sale at extremely low prices, and then immediately resold at high prices. Since users are anonymous and untraceable, once these assets are Once sold it is almost impossible to get it back.

Some Twitter users said that they discovered this vulnerability in Opensea’s system in June last year and reported it to the authorities, but Opensea did not pay attention to this problem, which led to large-scale attacks. In order to solve this problem, at the end of February, Opensea said that it would upgrade the smart contract. As a result, just after the front foot was upgraded, the back foot hacker immediately launched another attack, stealing up to 200 million US dollars of NFT projects in just 9 hours.

In fact, Opensea is not the only platform that has been attacked. Various NFT theft incidents have been emerging recently.

For example, just two days ago, the Boring Ape (BAYC) NFT was attacked by phishing again, with a loss of more than $400,000, and this was the third security breach attack on the project in the past two months. At the end of April, Boring Ape’s official Instagram account was just stolen, and $2.8 million worth of NFT was stolen through fraudulent links. Previously, Jay Chou’s boring ape NFT worth $420,000 also disappeared under this phishing attack.

Far more than hype, plagiarism, internal ghost fraud behind the NFT ebb tide, its "N original sins" appear

Image via investopedia

After the ‘savage growth’ spree, it’s time to calm down

With the frequent occurrence of various unsafe incidents, industry scandals, and increased regulation, the people who used to party all night for NFTs began to calm down gradually, and the entire market began to show an obvious and continuous ebb.

According to NFT sales statistics from the analytics website cryptoslam.io over the past 30 days, overall NFT sales have dropped by 65.43% since last month, from $4.6 billion in the previous month to $1.59 billion, with almost all projects’ sales falling 65.43 percent to $1.59 billion. Sales have fallen off a cliff.

Far more than hype, plagiarism, internal ghost fraud behind the NFT ebb tide, its "N original sins" appear

Image via cryptoslam.io

In addition to Jack Dorsey’s tweet mentioned at the beginning of the article, NFT has depreciated by more than 99%, and the prices of NFT’s blue-chip projects have also fallen sharply in the past two months. The average value of the Boring Ape has dropped by 60% since May 1, the average transaction price of the MAYC series has dropped by 78.12% in the past 30 days, and the cypherpunk series has dropped by an average of 55%.

According to Google Trend’s search data, the recent search popularity of “NFT” has dropped from the peak in July last year to the level before January 2021, which reflects that people’s attention to NFT is declining sharply.

Far more than hype, plagiarism, internal ghost fraud behind the NFT ebb tide, its "N original sins" appear

Statistics on NFT searches as of June 7, pictures from Google Trends

The ebb of NFT can be said to be an internal adjustment after a wealth-making carnival. In the past year, although a large number of companies have entered the NFT battlefield, the practical application value of NFT has been slow to find an export. The purpose of most people buying NFT is not to like a certain work as a collection, but purely for speculative purposes, expecting to make a lot of money in the constant change of hands.

Under such a mentality, a large number of NFT projects have become a game of drumming and passing flowers, and not being the last person to take over has become the survival rule of this game. And when NFTs are labeled as speculative products, they will face financial risks that may come at any time.

Irregular management, unsafe transactions, and investment attributes in a gray area, after this hype of “everything can be NFT”, people may have begun to rethink what the real value of NFT is.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/far-more-than-hype-plagiarism-internal-ghost-fraud-behind-the-nft-ebb-tide-its-n-original-sins-appear/
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