Coachella NFTs stop working due to FTX collapse

A concert poster for Coachella 2015, featuring a bird with intricate feathers walking through a patch of plants and circus rides in a desertCoachella: Desert NFT (attribution)
Coachella partnered with FTX to sell a collection of NFTs in February, ultimately raking in around $1.5 million. The NFTs were paired with physical items—Coachella passes, art prints, and photo books—and the NFT owners had the option to "redeem" their NFT to receive the item. However, all of this was done through FTX, and with FTX no longer fully operational, redemptions are no longer possible. The FTX server storing the artwork for the NFTs was also intermittently available, so holders reported seeing broken images when going to view their NFT.

Ten of the NFTs in the collection came with lifetime passes to Coachella, and sold for six figures. Each year, the NFT holder has to go through the redemption process to obtain their festival pass.

Many of the token owners bought their NFTs with FTX and simply left them in their accounts on the platform. Some were able to transfer their tokens before FTX's NFT platform stopped operating, but many did not.

Users attempt to circumvent FTX withdrawal freeze with bribes and NFTs

Users panicked when FTX stopped processing withdrawals, particularly those with substantial amounts of funds locked in the exchange. When the exchange tweeted that they had "begun to facilitate withdrawals of Bahamian funds", some saw an opportunity.

"Any FTX employees willing to change my accounts country of residence to Bahamas to facilitate withdrawal I am offering $1 million and unlimited legal fees", wrote one trader (who later claimed to be joking).

A popular crypto Twitter user named "Algod" offered $100,000 to any FTX employee who would process their KYC documents, allowing them to withdraw. He was subsequently seen to be successfully withdrawing over $2 million in assets from the platform. He also shared links to a Telegram group where his partner was offering to buy people's FTX accounts for 10¢ on the dollar, from customers who feared they may never see the money again, or would only regain access to a fraction of it after years of court proceedings. Algod later denied "erroneous and defamatory statements" that he'd bought discounted claims/assets", admitting that he'd considered it, but claiming he ultimately decided not to.

Some observers noticed over $21 million withdrawn via NFT trades, that appeared to be being used as a way to bypass the internal blocks on users transferring balances to one another. People with funds locked in FTX bought NFTs from Bahamas-based users, spending their full account balance on the NFT and thus enabling the Bahamian user to then withdraw the funds. "This appears to be the first recorded case of NFT utility in existence 👍", wrote Cobie.

Telegram repossesses usernames so they can sell them as NFTs

In August, the popular messaging app Telegram started repossessing some desirable usernames that were already being used. Shortly afterwards, Telegram founder Pavel Durov explained that he had been impressed by a quarter-million-dollar domain sale by the TON blockchain domain project, and wrote, "Let's see if we can add a little bit of Web 3.0 to Telegram in the coming weeks."

Telegram later introduced some of the repossessed usernames for sale as pricey NFTs on their new "collectible usernames" market, dubbed Fragment. Although Durov had claimed that "70% of all Telegram usernames had been reserved in inactive channels by cybersquatters from Iran", and that the only usernames that were "withdrawn" had been out of use, users were given no warning or option to keep their names.

On October 27, Durov announced that "in a few days, we will also introduce the ability for users to sell their existing usernames on Fragment" – unwelcome news for those whose usernames were sold out from under them by Telegram.

Some of the usernames that have sold on the marketplace include brand names like Facebook (which sold for 60,000 TON, or ~$94,200), FIFA (sold for 600,000 TON, or ~$972,000), Amazon (sold for 262,500 TON, or ~$425,000), and Meta (sold for 404,000 TON, or ~$723,000). There is no indication the buyers are necessarily associated with the brands in question. Furthermore, the username marketplace is not available in the USA.

Monkey Drainer steals dozens more NFTs, nets around $867,000

The "Monkey Drainer" NFT phishing scammer first identified by blockchain detective zachxbt has struck again. They successfully emptied 7 CryptoPunks and 20 Otherside NFTs, which they flipped for 522 ETH (~$867,000). The scammer then laundered the funds through the Tornado Cash cryptocurrency mixer.

Monkey Drainer steals ~$1 million in 24 hours

A phishing scammer called "Monkey Drainer" stole around 700 ETH (~$940,000) in 24 hours on October 25, according to blockchain sleuth zachxbt. The scammer used malicious phishing sites to trick users into signing transactions that then drained cryptocurrencies and NFTs from their wallets. Some individual victims lost crypto valued at hundreds of thousands of dollars, and others lost NFT collections. Zachxbt estimated the total amount solen by Monkey Drainer to be around $3.5 million.

Warner Bros. reinvents DVD navigation menus with their web3 "Movieverse"

Image of Sauron throwing the Ring into a fireThe Lord of the Rings: The Fellowship of the Ring Extended Edition Epic (attribution)
Warner Bros. has just announced their "The Lord of the Rings: The Fellowship of the Ring (Extended Version) Web3 Movie Experience". Catchy name.

Now, you have of course already been able to purchase or stream The Lord of the Rings: The Fellowship of the Ring (Extended Version) for twenty years now. But now you can buy a $30 or $100 NFT to get the same thing, which also boasts "themed navigation menus based on iconic locations from the beloved film". So one of those DVD navigation menus. The NFTs come with other vagaries, including "8 hours of special features, image galleries, [and] hidden AR collectibles".

Plus, of course, you can "own and trade the experience in a community marketplace".

Two days after launch, 4,203 of the 10,000 "Mystery Edition" NFTs have sold for their $30 mint price. They're already reselling on the secondary market for as low as $7.99. The $100 mint "Epic" NFTs are doing slightly better—all 999 of those were minted, and are reselling on the secondary market for around $200. All told, WB has made around $225,000 off the mint.

Unstoppable Domains disables .coin extensions, illustrating an issue with the idea that "you'll always own your NFT"

Unstoppable Domains is in the business of selling "domains" — at least that's what they call them, but they're not the kind of domain that you can plug into your web browser. Instead, they are more like the ENS domains that you may have seen (the ones ending in .eth), and they typically map to a crypto wallet address.

The organization just discovered that they were not the first to go around selling .coin "domains" (represented by NFTs), and were at risk of running into collisions. As a result, they decided to no longer sell these domains, and stop their libraries and services from resolving them.

But fear not, they said, because "Unstoppable domains are self-custodied NFTs, so you still own your .coin domain, but it won’t work with our resolution services or integrations."

That's right, folks, you'll still have your .coin NFT! It just won't resolve, or be otherwise useful in any way.

This is much like the argument that has been common in crypto when describing a use case for NFTs: "if it's an NFT, you'll be able to really own your World of Warcraft sword, and Blizzard won't be able to take it away from you if they arbitrarily decide to ban you or remove the item!" This ignores the fact that the existence of an NFT on a blockchain does not ensure that some functionality initially advertised will continue to work in perpetuity, and you might end up with a domain name or a sword that can do nothing more than sit in your crypto wallet collecting dust.

Unstoppable Domains has offered to credit purchasers of .coin domains 3x their purchase price, though this will likely not be as appealing to people who held domains they hoped to flip for much higher than the initial price.

Roofstock claims to have completed its first one-click NFT home sale

A grey single-family home with a garage door and cement drivewayThe house that was sold via NFT (attribution)
If you've ever wished you could put the same amount of thought into buying a $100,000+ home as you do ordering another bag of dog food from your online retailer of choice, you're in luck! A company called Roofstock claims to have achieved its first house-as-NFT sale on a platform it promises will "provide a radically simple way for [single-family rental] properties to be purchased and sold with one-click using web3 technology". The home in question was a $175,000 single-family residence in Columbia, South Carolina.

Needless to say, there were more than a few questions around the legal and tax ramifications of this. Some of the more crypto-minded spoke excitedly of "the ability to easily fractionalize your properties or take loans against it in a decentralized way" that this might unlock, while the rest of us were left wondering what a defi loan default and foreclosure would look like.

As much as I agree the real estate system could use some improvements, introducing the ability for someone to hack my crypto wallet and take my house is not quite what I had in mind.

CNN accused of rug pull after ditching their Vault NFT project

In June 2021, CNN launched "Vault": a project to "make moments from history available for purchase". The project involved minting as NFTs various clips of CNN footage and photographs from their archives, such as CNN's predictions that Bush and Obama would win their presidential elections, or "War Notes": a series of photos and accompanying handwritten notes from Ukrainians impacted by the Russian war on Ukraine. On October 11, CNN announced they would "no longer be developing or maintaining this [Vault] community".

Although CNN claimed in their shutdown announcement that "Vault was originally launched as a 6-week experiment", CNN had not mentioned that the project was an experiment that was expected to possibly end. As recently as last month, Vault had been teasing upcoming events scheduled around election day in November, and encouraging users to buy more Vault NFTs to access the upcoming drops.

As an apparent attempt to placate angry users worried that the value of their NFTs might drop, CNN promised to return "either FLOW tokens or stablecoins" for "roughly 20% of the original mint price". However, the project is built on the Flow blockchain, where users can only withdraw stablecoins $10 at a time—and with a $4 fee on each withdrawal. Some angry users in the project's Discord channel threatened legal action, claiming that CNN had rug pulled.

U.S. SEC is investigating Bored Apes creator Yuga Labs

An illustration of a bright pink ape, wearing a captain's hat, with heart-shaped sunglasses, with eyes on its neck, and a gold jacket and chainBored Ape #648 (attribution)
According to a scoop in Bloomberg, the United States Securities and Exchange Commission has been probing whether NFTs from Yuga Labs should be considered securities regulations, and may be in violation of federal law.

Yuga Labs is the company behind the Bored Apes NFTs and spinoff projects (Mutant Apes, and Bored Ape Kennel Club), and in March also acquired the blue-chip NFT collections CryptoPunks and Meebits.

A probe does not necessarily mean that Yuga has violated the law, but such an investigation could have major ramifications for the world of NFTs.

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