SudoRare NFT exchange rug pulls for $820,000

Six hours after its launch, the team behind the new SudoRare NFT exchange took the money and ran, deleting the project website and social media. People had already warned about issues in the project contract that signaled it could be a scam, but those were either unseen or unheeded by the people who put a collective $820,000 of various tokens into the project.

At least one of the scammer wallets interacted with the Kraken crypto exchange, a U.S.-based exchange that requires KYC, so it's possible that Kraken could help identify the scammers—though they've not made any public moves to do so.

Bank run leaves BendDAO with 5 ETH and a bunch of NFTs they can't sell

Honestly, who can blame BendDAO for failing to consider that the hype bubble around Bored Apes and other NFT projects might not last forever! "We underestimated how illiquid NFTs could be in a bear market when setting the initial parameters", the project wrote in a governance proposal.

BendDAO allows people to take out loans with their NFTs as collateral. However, if the floor price of those NFTs drops too far and the borrower doesn't pay back some of the loan to adjust its risk rating, other people can bid on the NFT.

The problem with this whole plan was revealed when lenders' confidence was shaken when it was reported that $5.3 million in Bored Apes were at risk of liquidation. Panicked users withdrew their assets from the platform, resulting in a bank run that drained the reserves to a low of 5 ETH (~$8,200). BendDAO had other assets, of course: the NFTs below the liquidation threshold. However, a lack of interested buyers willing to pay the minimum prices (95% of the collection floor price) left the project in a tough spot.

Since the extremely close brush with a liquidity crisis, the project has begun to consider a proposal that would reduce the threshold at which NFTs can be liquidated, reduce auction and liquidation protection periods, remove the 95% floor price bid requirement, and increase interest rates.

OpenSea's stale listing issue burns another collector

An illustration of a white penguin wearing a bow tie and gold crown on a light blue backgroundPudgy Penguin #2951 (attribution)
The same issue that led to OpenSea paying out $1.8 million to users who lost their NFTs is apparently still alive and well (despite OpenSea's introduction of an "Inactive listings" panel). Users who have listed NFTs for sale and never removed the listing have occasionally been surprised in a very bad way when their NFT suddenly sells for an old price—sometimes much different than the going prices for those NFTs.

In this case, a person successfully sold their Pudgy Penguin NFT for 8.69 ETH a year ago ($27,500 at the time of sale). Those particular NFTs have been having a comeback lately, and so the collector bought the same NFT back—this time for 20 ETH ($31,500 at the time of sale). However, an old listing from their previous ownership was still active, and someone was able to snap up the NFT from them for only 9.89 ETH ($15,600) within minutes.

The collector's near-instantaneous $20,000 loss has a happy ending for them, though—the person who bought the NFT was willing to reverse the trade.

Someone buys a Bored Ape, gets scammed out of it two hours later

An illustration of an ape with black fur, sticking out its tongue, wearing a tuxedo t-shirt and a gold stud earringBored Ape #887 (attribution)
In what might be a new record, someone bought a Bored Ape NFT for 70.69 ETH (~$116,000) and had it stolen from them less than two hours later. The scammer quickly flipped the NFT for 61.6969 ETH (~$101,000), then bridged the funds through RenBridge to cover their tracks.

Sub-primate lending: $5.3 million in Bored Apes used as loan collateral are at risk of being liquidated

Chart showing the floor price of the Bored Ape collection over the last 30 days. On July 20 the floor price was 92.7 ETH; it is now at 69.4 ETH.Bored Ape Yacht Club floor price over the last 30 days (attribution)
When people started sinking hundreds of thousands of dollars into Bored Ape NFTs, it wasn't long before people came up with the genius idea of using those NFTs as collateral for loans. BendDAO is one such platform offering the service, allowing people to post their Ape as collateral in exchange for a crypto loan equal to 30–40% of the Bored Apes collection's floor price. At one point, one borrower had 10,000 ETH (~$17.5 million) in loans from BendDAO against his 60-ape-strong collection (though he since repaid the loans).

However, NFTs in general haven't been doing so hot lately, and the Bored Apes haven't been immune from the slump. As the Bored Apes collection floor price has decreased, more than 15% of the apes used as collateral for BendDAO loans are in the "danger zone"—close to being auctioned off. These 45 apes are valued at roughly $5.3 million. Liquidation could lead to cascading liquidations, as the auctions could themselves cause the floor price to decrease.

As Bennett Tomlin put it, "I hate that y’all somehow created a risk for cascading liquidations of JPEG backed loans".

DegenTown NFT project rug pulls after promotion from Magic Eden

Cel shaded illustration of a humanoid figure with purple skin smirking. They have a roof of a house on their head with Japanese characters and lanterns hanging from it, and are wearing a grey cape with a black clasp. Behind them is fire and a night sky with a large moon.Degen Degen #4901 (attribution)
DegenTown, a collection of brightly-colored cel shaded humanoid figures, launched with much promotion from Magic Eden on their Launchpad minting service. Magic Eden aims to provide collectors with a level of trust in the project by requiring creators to disclose their identities to the company.

DegenTown first suffered issues in July, when the project's Twitter account was allegedly hacked, and users were tricked into approving a contract that drained their wallets. One individual behind the project promised they would compensate the users whose wallets were drained, but never did.

The project ultimately rug pulled instead, with Magic Eden acknowledging it in a blog post and Twitter thread on August 17. They wrote that they were "urging the original Degen Town founders to return the funds"—however, this is complicated somewhat by the fact that the identity of one of them is not known to Magic Eden. They explained, "Our prior policy was that we doxxed founders. NFTRamo claimed to be an advisor but we learned that he was actually the founder of the project and used being an advisor as a way of skirting our doxxing processes." This is not the first time their identity verification process was sidestepped—they introduced it after a serial rugpuller used their platform to anonymously sell and then rug pull another NFT project, but that same person was able to do it again only a few months later.

The DegenTown project minted 8,000 NFTs for 3 SOL apiece, bringing in $923,000. Beyond that, the creators took 7.5% in royalties on secondary sales. Magic Eden has said that they were able to get one of the two founders to return the funds they'd earned from the mint, and that they planned to use them to compensate buyers.

Claims of racist imagery in Bored Ape Yacht Club NFT project make it to court

Two side-by-side images. On the left is a Pepe meme from 4chan, where Pepe is wearing a hachimaki reading "神風" ("kamikaze", but the characters are reversed in order). On the right is a Bored Ape wearing an identical hachimaki.Comparison between a racist 4chan Pepe meme and an identical Bored Ape attribute (attribution)
In a motion to dismiss a trademark lawsuit filed by Yuga Labs (the company behind the Bored Ape Yacht Club NFT project) against Ryder Ripps and various others, the defendants outlined in detail their beliefs that the Bored Apes project intentionally includes racist and Nazi dogwhistles, and that Yuga's lawsuit is a strategic lawsuit against public participation (SLAPP) intended to silence criticism.

Ripps is a part of a group of people who have vocally criticized the Bored Apes project for being racist and antisemitic, with what they believe are intentional hat-tips to 4chan culture. Ripps also created his own NFT project, called RR/BAYC, where he clones the Bored Ape NFTs and sells them in what he says is a "critique [of the] hateful imagery". Because Yuga Labs has never brought action against any of the many Bored Ape ripoff NFT collections, he and his lawyers are arguing this lawsuit is an attempt to silence his criticism.

Some of Ripps' and others' individual claims about dogwhistles in the project are more believable than others, but in their entirety they are pretty damning. Ripps is not the only one who has been outspoken about the issue, and is joined by people in and outside of the NFT world.

Collector loses four Bored Apes valued at over $500,000 to phishing attack

An illustration of a white-furred ape, with a bandage around its eyes, wearing a toga.Bored Ape #2393, the one stolen NFT yet to be sold (attribution)
An NFT collector who goes by ASEC_APE lost four Bored Ape Yacht Club NFTs to a phishing attack. The attacker quickly flipped three of the four NFTs for a total of around 200 ETH (~$387,000). The fourth is listed for sale on the NFT platform X2Y2 for 84.59 ETH (~$159,000)—a total profit of $546,000 for the scammer if they find a buyer at that price.

ASEC_APE had just purchased the four NFTs between July 15 and August 13 for a combined total of 326 ETH (~$532,000 based on ETH prices at the time of each purchase; ~$631,000 at the price on the day of the theft).

One of the stolen NFTs, Bored Ape 9012, had just been stolen a week before from Cameo CEO Steven Galanis when his wallet was compromised, as were a handful of other pricey NFTs. ASEC_APE had purchased it from the person who purchased it from the hacker shortly after the August 6 theft.

Scammer trades fake ApeCoins for Bored Ape NFT

An ape with fur colored like television static wears a rainbow-colored hat with a propeller. Its eyes are closed, it's biting its lower lip, and it's wearing a black shirt with a skeleton printed on it.Bored Ape #8373 (attribution)
A scammer created a fake ApeCoin contract on the NFT Trader service, with tokens that appeared identical to the true ApeCoins but were actually worthless. After "chatt[ing] for a long time about location, jobs, the space", the owner of Bored Ape #8373 was convinced to trade it for 26,500 "ApeCoin", which would be valued at $163,770 if they were real. "I didn't bother double checking the contract as I figured [NFT Trader] only allows [OpenSea] verified collections and contracts anyway," the victim wrote on Twitter. The scammer flipped the NFT several minutes later for 78 ETH ($154,774).

OpenSea changes its policy, requires a police report to freeze NFTs

The dominant NFT platform, OpenSea, has changed its policy around NFTs that are reported as stolen. OpenSea now requires those who have reported an NFT as stolen to produce a police report within seven days, or else they will re-enable trading of the asset.

Some have praised the change as a good step towards preventing false reports, whereas others have complained that the change does not apply retroactively to assets that have already been frozen from trading on the platform. Others have raised concerns about the new requirement that they engage with police.

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