They wrote in their announcement that, although they had some money left, the "prolonged downturn" in the NFT market was causing them to "anticipate significant challenges in securing further investment which would make it difficult". They said they would be returning unused funding to investors and shutting down most of the site's functionality immediately.
MakersPlace NFT marketplace shuts down
Citing "ongoing market challenges and funding difficulties", the MakersPlace NFT platform announced it will be shutting down after six years of operations. The company had raised $30 million in funding in August 2021 from investors including Eminem, Sony Music, and Coinbase Ventures.
- "MakersPlace Announces Market Exit", MakersPlace
The Idols NFT loses $324,000 to exploit
An attacker noticed a vulnerability in a smart contract for The Idols, an NFT project that also incorporates ETH staking functionality. They discovered that a function used to distribute rewards had a bug when the sender and recipient addresses were the same, allowing a holder to repeatedly claim rewards. By taking advantage of this bug, they were able to siphon 97 stETH (~$324,000) from the project.
Although The Idols boasts of two audits from several years ago, the contract containing the vulnerability may not have been audited.
- "The Idols NFT", Rekt [archive]
Australian Open apparently scraps its NFT project
Holders of any of the several thousand "AO ArtBall" NFTs may be disappointed as the Australian Open appears to have abandoned the project aimed at tennis fans. The first NFTs originally sold for 0.067 ETH (~$275 at the time), and another round were minted for 0.23 ETH (~$450 at the time). However, the sale prices of the NFTs have steadily dwindled since early 2023, and recent sales have been for 0.003 to 0.0075 ETH (~$10–$25).
Buyers were told they could use the NFTs as a sort of fan pass, receiving access to a Discord, and earning ground passes and behind-the-scenes access for finals weeks. There was also a scheme in which NFT holders could redeem access to passes to matches.
However, the Australian Open seems to have let the project — launched at the peak of NFT hype — peter out, with no mention of redeeming passes, and project websites still promising a 2024 update. The Discord has been shut down.
Two NFT fraudsters charged for rug pulls amounting to over $22 million
Gabriel Hay and Gavin Mayo, two LA-based NFT creators, have been charged for defrauding investors of more than $22.4 million through a series of NFT rug pulls and other crypto scams. The duo launched various projects with detailed and false roadmaps to lure NFT buyers, then abandoned the projects without following through.
For example, a "Vault of Gems" NFT project falsely claimed to be the "first NFT pegged to a hard asset, like jewelry", which would have its own exchange. A "Faceless" NFT project promised to produce comic books, a movie, and a clothing company. None of the promises ever materialized, and Hay and Mayo abandoned the projects soon after launching them.
Hay and Mayo worked to hide their involvement with their scams, and have been charged with harassment for attempting to threaten those who connected them. In one case, after a person revealed Hay and Mayo to be the ones behind the Faceless NFT project, the duo sent threatening emails and text messages to the man and his parents. In an email to his parents, they impersonated a law firm, and even threatened to make false sexual abuse claims against the man.
- Indictment of Gabriel Hay and Gavin Mayo [archive]
85-year-old painter loses life savings to NFT art dealer scam
An 85-year-old painter from Brooklyn was convinced to send scammers $135,000 after they promised they would sell his artwork as NFTs on OpenSea. After agreeing to have a supposed "art dealer" list and sell his artwork, the man was told he'd earned $300,000. But there was a catch: he would have to pay nearly half that amount in "fees" to get access to his windfall. The man liquidated his retirement, made credit card payments, and took out a personal loan to acquire cryptocurrency for the supposed fees, only to later realize he'd been duped.
Police were unable to recover his money, although they did seize around 40 websites that were spoofing various real NFT marketplaces.
- "Brooklyn District Attorney Shuts Down 40 Domains Associated With NFT Crypto Scam Targeting Artists, After Brooklyn Painter Lost Over $135,00", "Kings County District Attorney's Office" [archive]
Nike to shut down its RTFKT "virtual sneakers" project
Nike will be shutting down its RTFKT "virtual collectibles" project at the end of January 2025, according to an announcement made in early December. Nike had acquired RTFKT in 2021 as "part of its move into the metaverse", banking on the idea that people would be excited to buy virtual sneakers and other NFT collectibles that their avatars could wear in the metaverse.
However, the "metaverse" trend failed to take off, and Nike is only the latest company to abandon its multi-million dollar investment in the space.
CryptoPunk sells for a fraction of its likely market price due to zombie smart contract
A rare CryptoPunk NFT recently sold for only 10 ETH (~$25,300), despite a market value that's likely around 600 ETH (~$1.5 million). The sale went through thanks to lingering smart contracts from a defunct NFT fractionalization platform called Niftex, which allowed people to buy and sell "shards" of various NFTs. Niftex launched in November 2020, and is now defunct, with its domain redirecting to the Kraken cryptocurrency exchange.
The platform's smart contracts remain operational, however, and so despite the lack of a frontend website for the platform, the backend still remains. A trader was able to use these smart contracts to trigger a feature that allows a buyout of the fractional shard holders which, if not countered by someone else, automatically goes through in 14 days. The bidder proposed a purchase of 0.001 ETH per share, and without an operational Niftex frontend, no one noticed. The bid went through, and the trader successfully purchased all 10,000 shares — and thus, the NFT — for 10 ETH.
Since then, several people have offered to purchase the NFT for amounts ranging from 100 to 605 ETH. If the new owner were to accept the 605 ETH bid, they would 60x their purchase price.
One owner of a fractionalized share said he thought he had managed to successfully block the sale, but miscalculated. "GG to the new owner", he wrote. He wrote on Twitter, "I don’t consider this a heist. It’s an arb. The smart contract worked as intended. If you want decentralized systems you have to take the good with the bad. It’s part of the game. It’s why we’re here. If you don’t like those rules, you probably shouldn’t be playing."
Lacoste quietly ditches its "UNDW3" project
Lacoste abruptly shutdown the website, Discord, and Twitter account belonging to "UNDW3", its NFT project. Lacoste launched its original collection of NFTs in June 2022, selling 11,212 of the tokens for 0.08 ETH (~$93 at the time). Lacoste made around $1 million off the mint, plus earnings from fees on secondary sales. Later announcements promised holders of the NFTs that they could participate in raffles to earn real-life merchandise and "digital twins". They were also promised a say in the future direction of the brand.
However, that's vanished as the project was closed without any acknowledgement. People still have their NFTs, but can no longer earn benefits from Lacoste. Meanwhile, resale prices have dwindled to around 0.004 ETH (~$13). Angry token holders have accused Lacoste of a "soft rug pull".
Perhaps naming your crypto project "underwater" was an ill omen.
OpenSea receives SEC Wells notice
OpenSea has announced that they received a Wells notice from the U.S. Securities and Exchange Commission, warning them of a likely lawsuit from the agency. According to CEO Devin Finzer, "they believe NFTs on our platform are securities". Finzer did not provide any more details about the scope of the SEC's notice.
Finzer promised that the company would vigorously fight any impending lawsuit.
The lawsuit echoes previous enforcement actions by the SEC, such as a September 2023 settlement with the celebrity-backed Stoner Cats project, in which the SEC suggested that it may broadly view NFTs as securities if investors "reasonably expect to profit" from the continued efforts of those who release the NFTs.
DraftKings abruptly shutters its Reignmakers NFT project and marketplace due to "recent legal developments"
American sports gambling behemoth DraftKings announced the shutdown of its Reignmakers NFT game and NFT marketplace, effective immediately. Reignmakers was a fantasy sports game that allowed players to purchase digital trading cards used for digital fantasy leagues.
In an announcement in the project Discord and on their website, DraftKings wrote that the shutdown was "due to recent developments". They offered holders the ability to cash out their Reignmakers cards "based on factors that include, but are not limited to, the relative size and quality of your digital game piece collection". Holders were also invited to transfer their NFTs to their own cryptocurrency wallets, although the DraftKings-run "contests" in which people used their NFTs to try to earn rewards and win prizes will no longer exist. It's also unclear whether some NFTs, built to not be transferrable off-marketplace, will be able to be retained by their holders.
Members of the DraftKings Discord reacted with chagrin to the news, and doubt that the vague promises of cash payments would amount to much. "What kind of compensation u think we get coming to us? Pennies?" wrote one. "Yeah I'm out like $20k," said another. Some blamed the shutdown on a recent lawsuit from a holder of the Reignmakers NFTs who lost $14,000 — a lawsuit which recently survived the motion to dismiss stage.