Category: News

Yuga Labs is one of the most successful companies in the NFT sector, owning the rights to such mammoth collections as the Bored Ape Yacht Club and the Mutant Ape Yacht Club. Over the course of its existence, it has seen hundreds of millions of dollars in sales and global recognition. 

Now, however, Yuga Labs might be the subject of an investigation by the Securities and Exchange Commission (SEC). This is according to an October 11, 2022 report from Bloomberg. Citing sources close to the matter, the report suggests that the SEC is investigating Yuga Labs and its assets to determine whether or not they qualify as securities in the vein of stocks. 

Yuga Labs Under Scrutiny 

The question of whether or not blockchain-based assets are securities is a long-running one. Cryptocurrencies were subject to the same debate for years and now, NFTs are as well. In fact, the person at the centre of the ongoing NFT insider trading trial is seeking to have his charges dropped on the basis that insider trading only applies to securities and that NFTs are not securities. 

This is clearly a line of questioning that the SEC is looking to follow as the source says it is looking into the entire NFT sector. More specifically, it is looking to determine if the sale of NFTs and some fractional NFTs constitutes the sale of unregistered securities. The NFT and digital asset market are notoriously underregulated compared to more ‘traditional’ assets and the implications of this investigation could be massive.

If NFTs are considered to be securities in the same way that stocks are, it could open up the floodgates for a lot of legal drama. Would Yuga Labs be deemed as selling unregistered securities? Because if so, the same could be said for thousands of NFT projects around the world. Would they face prosecution? What happens to the case of the ex-OpenSea employee accused of NFT insider trading? 

These are all questions that NFT lovers have been pondering ever since the story broke.

Where Do NFT Projects Go Next?

While a spokesperson for the SEC refused to confirm or deny the rumours, Yuga Labs has put out a statement. Speaking to CoinTelegraph, a spokesperson for the company said, “It’s well-known that policymakers and regulators have sought to learn more about the novel world of Web3. We hope to partner with the rest of the industry and regulators to define and shape the burgeoning ecosystem. As a leader in the space, Yuga is committed to fully cooperating with any inquiries along the way.”

In actuality, all we can do is wait and see if this investigation yields any results. If somehow NFTs are found to be securities then a long legal process will begin to develop a framework to accommodate them and companies like Yuga Labs will either be facing regulatory action or will have to formally register as securities operators. 

If they are not, then the industry may continue as usual.

A few months ago, artist Damien Hirst made headlines when he announced his project called ‘The Currency’. This project saw Hirst ask his buyers to choose between either the physical art that they had purchased from him or the NFTs of the pieces. He claimed that whatever physical pieces were not chosen would be burned. 

Now, the project is approaching its conclusion, with Hirst burning thousands of his own art pieces in one of the more controversial and interesting events of the art world this year. In total, the value of all the pieces destroyed is put at £10 million. 

Burning Paintings

For ‘The Currency’, Hirst said he was exploring and making commentary on the modern financial system. Digital assets are ‘burned’ all the time and now, Hirst is doing the same to oil paintings. 

“This project explores the boundaries of art and currency — when art changes and becomes a currency, and when currency becomes art. It’s not a coincidence that governments use art on coins and notes,” he said at the time. 

The collection initially had 10,000 pieces and the first 1,000 physical pieces left behind were burned this week. 5,149 of his buyers chose to keep the physical artwork while 4,851 opted for NFTs instead. On October 11, 2022, Hirst began burning the paintings that were left behind. The burning took place at his Newport Street Gallery and was also live-streamed online. This will go on until October 30, 2022, when the project will officially end, having kicked off on September 9, 2022. 

When Hirst first announced the project, it caused controversy around the world. Many accused him of being wasteful, given the value of the art and also claimed that this was nothing but a publicity stunt. But Hirst has stuck to his guns, saying during the burning event that the art being burned was not being ‘destroyed’ as it still existed in NFT form. 

“A lot of people think I’m burning millions of dollars of art but I’m not. I’m completing the transformation of these physical artworks into NFTs by burning the physical versions. The value of art, digital or physical, which is hard to define at the best of times will not be lost; it will be transferred to the NFT as soon as they are burnt,” he said. 

Damien Hirst and the Value of NFTs

Whether or not this is an artistic commentary or a publicity stunt, what Hirst is doing has brought up a discussion about the value of art as NFTs. His argument is that the art being burned still ‘exists’, just in NFT form. Some are not convinced of this, however. 

Is a digital painting still as valuable as a physical one? After all, people already pay millions for digital art pieces so clearly, they are worth something. It is an age-old debate among artists about what makes art valuable but as NFTs become a part of the scene, even more, it seems they will have to keep fighting for legitimacy.

Big food and beverage chains getting in on NFTs is nothing new at this point. We’ve seen Starbucks, Taco Bell, and others launch web3 projects and it’s something we’ve almost come to expect at this point. But IHOP (International House of Pancakes) has taken this to a new direction by pranking its customers and the general public.

How IHOP Fooled Everyone

This all started on October 6, 2022, when IHOP stated on its official Twitter that it would be joining its contemporaries by launching an NFT project. 

“Have you guys heard of NFTs? Well before anyone else jumps on the bandwagon, we’re dropping our own! Check out the countdown at https://ihop.com,” its tweet said, accompanied by a video saying that it would be dropping an NFT on October 10, 2022.

This tweet saw praise from many NFT enthusiasts who were happy at such a big food brand getting in on NFTs. Sadly, this was not the case as the ‘NFTs’ that IHOP was referring to was actually its Thick ‘N Fluffy French Toast! These can be purchased by using 10 PanCoins, its digital customer loyalty token. 

Clearly, the whole affair was a hoax meant to play a prank on customers and draw in more attention thanks to the oncoming NFT craze among consumer brands. Reactions to the prank have been mixed, with some seeing it as a clever marketing tool and others feeling tricked. However, this is not the first time that IHOP is dabbling into digital assets or creative marketing. 

Back in March 2022, when its PanCoins and “International Bank of Pancakes,” loyalty program were first launched, IHOP heavily leaned into the theme of cryptocurrency. The imagery for its ads featured coins that looked quite similar to Bitcoins being stacked on top of one another pancake-style. 

The PanCoins could be earned by purchasing IHOP products and then ‘burned’ by getting free food and rewards from the chain. Its Chief Marketing Officer Kieran Donahue acknowledged in interviews that the similarities between the language and images used in the campaign and cryptocurrency were deliberate on the part of the brand. 

Then there was the now-infamous rebrand to the International House of Burgers that IHOP announced a few years ago. After a few weeks of backlash and endless internet memes, the company said it would be backtracking on its rebrand, though many believe that it was a publicity stunt from the beginning. 

International House of NFTs

This whole incident, while wildly entertaining, does show how accepted NFTs have become, especially by consumer brands. IHOP has twice used the imagery and languages of blockchain-based assets to get attention because those assets are attention-grabbing in 2022.

While the brand isn’t launching an NFT project just yet, the asset class is embedded enough in that sector that no one would be surprised if they did. And if IHOP does eventually launch such a project, consumer response would be mostly positive, if this prank is any indication. Let’s just hope customers believe them should such an announcement be made.

As most NFT enthusiasts will tell you, we are currently in the middle of a crypto winter. This has meant that many assets have seen their value decline significantly and this doesn’t only apply to cryptocurrencies. NFTs from blue-chip collections have also taken a hit, though some more than others. 

In one of the most notable so far, an Azuki asset which was valued at $623,000 last year has seen its price drop to just $10. This is notable not just because it was a rare  Azuki ‘Bumblebee’ NFT but also because it had been bought by YouTuber and media personality Logan Paul.

Azuki Takes a Dip

One of the things that have boosted NFTs’ public profile over the years has been the way celebrities have embraced them. From Madonna spending hundreds of thousands on Bored Ape to Snoop Dogg practically becoming an NFT evangelist, these assets have become status symbols. 

But, at the end of the day, they are also investments and not all investments do well. This is a lesson Paul seems to have learned as he touched on his Azuki’s remarkable value loss on Twitter. 

“A year ago, I spent $623,000 on an NFT. Today, it’s worth essentially nothing. I’ve immortalized this mistake in 99 Originals with an exact replica helmet & outfit,” he said in a tweet from earlier this year. 

The Originals he was referring to are an NFT replica he made of the Azuki asset. Paul also has his Originals 99 NFT collection which features pictures taken by him that was launched in 2021. Now, his replica piece has been added to the collection and advertised to fans, perhaps as a way of recouping his loss. Sadly, this is not the entirety of Paul’s NFT-related woes. 

Back in 2021, he paid  $60,000 and $95,000, respectively for two assets from the Genesis Rocks collection, Rock #65 and Rock #68 NFTs. Now, these assets are listed at barely $100 online. These incidents have fuelled many NFT critics who have taken them as evidence of the industry finally being dead. 

Trouble in NFT Paradise?

But what has caused such a huge dip in the value of these assets? Obviously, there is the crypto winter which has affected the entire blockchain sector and not just NFTs. As such, even a top collection like Azuki is not immune to the current market condition. 

Then there is the state of the resale market as a whole. You might remember that the person who bought Twitter founder Jack Dorsey’s first tweet for millions of dollars struggled to get even a few thousand dollars when he tried to resell it. It seems that for some collections, the value of the assets is in the novelty and once that wears off, so does their value. 

This is also a timely development given that there is more of a push within the market towards NFTs that offer utility such as perks and potential income generation.

The ongoing Russia-Ukraine war has had massive implications for all sorts of industries. This has included several multinationals closing down shop in Russia and some businesses refusing to serve customers in that region. The NFT sector has not come out unaffected either, with several projects popping up to raise funds to support Ukraine. 

Now, in one of the biggest effects we’ve seen so far, Dapper Labs has taken steps to restrict the accounts of Russia-based users. This is in compliance with a new set of restrictions placed on Russia by the European Union, which were approved on October 6, 2022.  

The Effects of the Sanctions 

This new set of sanctions against Russia is targeting both its economy and its access to outside businesses. This came in response to Russia’s decision to annex certain conquered territories in Ukraine as its own. Notably, part of the sanctions states that digital asset service providers cannot provide services like wallets to Russian users, regardless of the value of the assets. 

Previous sanctions mainly focused on high-value assets which were worth over $11,000. Now, sanctions include all assets regardless of worth. Dapper Labs has announced that it will comply with these orders via a message posted on its website. 

“Our payment processing and stored value service partner is subject to EU regulations and has directed us to take action on all accounts held by those impacted by the Oct. 6 restrictions, consistent with EU law,” the message says. 

The company went on to further explain what this means. First of all, Dapper Labs confirmed that the accounts belonging to users in Russia would not be closed down. These accounts will still exist and will have access to whatever NFTs they have purchased. However, they will face heavy restrictions in that they cannot buy, sell or gift any NFTs using their Dapper Labs accounts. 

They also cannot withdraw assets from their accounts, though their ownership is unaffected. Now, industry players are watching to see which other blockchain-focused companies will announce restrictions over the next few weeks and what they will be. Binance, for example, has been caught in the crosshairs as while it has stated that it will not be introducing any restrictions, local Russian media has reported otherwise. 

For NFT lovers within Russia, this is a very significant move because not only are their accounts restricted but they have lost access to Dapper Labs’ roster of sites. These include popular sports NFT marketplaces like UFC Strike, NBA Top Shot, and NFL All Day.

The Ripple Effect of War

Wars affect every part of the human experience and this includes access to commerce and business. Sanctions have always meant that everyday citizens could not access many of the products and services that they need but in the modern world, this includes digital assets like NFTs. 

From being restricted from buying NFTs to being unable to make withdrawals, the effects of the conflict on Russian NFT lovers are certainly palpable.

One of the most intriguing stories to have come out of the NFT space this year was that of Nathaniel Chastain, who is a former employee of OpenSea. Last year, Chastain was fired from his position and is currently being charged with insider trading. 

While working at OpenSea, Chastian used his insider knowledge about what assets and collections would be featured on the OpenSea homepage to make a profit for himself. His case has marked the first time that someone is being charged for insider trading with regards to NFTs. Now, Chastain is hitting back, at both the FBI and his former employer. 

Chastain Makes His Case

In recent court filings, Chastian is looking to have the term of insider trading dropped from his case. He has states that the use of this term to describe his actions as  “inflammatory” and “unduly prejudicial”. The argument that his legal team is making is that insider trading only applies to assets that are recognized as securities by regulatory bodies. NFTs and other blockchain-based assets operate in a bit of a regulatory grey area and his team is looking to have his case thrown out on these grounds. His team has also claimed that the regulatory bodies involved in this case, namely the SEC and FBI, are trying to use it to their own benefit. 

“The term’s presence in the Indictment—and any reference to it at a trial—serves no legitimate prosecutorial purpose and is simply a means for the government to increase media attention and inflame the jury in this first-of-its-kind case in the digital asset space,” recent documents said. 

Besides the legal back-and-forth about the accuracy of the term ‘insider trading’, Chastain’s lawyers are also trying to subpoena OpenSea itself. One of the arguments against Chastain is that not only did he act unethically in his role but he cost the platform money because of his actions. 

But Chastain denies all of this and claims that OpenSea did not suffer any financial damage because of him. To prove this, his team wants access to OpenSea’s internal and external communications. This includes Slack messages, emails, and communication with government bodies that would have referenced him in any way.

As for the FBI, Chastain says that he suffered an illegal interrogation at their hands in 2022. In September of that year, the FBI conducted a raid on his home and he says that his electronic devices were accessed without his consent and that he was subject to an illegal interrogation.

As a result, his team wants all the statements he made during the interrogation and all the information collected from his devices to be ruled inadmissible. 

The Case of the Year?

Regardless of the outcome, this case is already a landmark one, as it has opened the floodgates for insider trading investigations when it comes to digital assets. Whether what Chastain did can be considered insider trading and whether or not his statements are admissible, it is certainly gearing up to be one of the most interesting this year.

Dapper Labs has established itself in both the sports and NFT arenas. This has been done through the launch of NBA Top Shot and NFL All Day, two NFT marketplaces to cater to the NBA and NFL respectively. This opened up a world of new opportunities for sports fans who can get top game moments as NFTs. 

Now, Dapper Labs is expanding its empire with the announcement of LaLiga Golazos which will hold its closed beta launch on October 27, 2022. This platform will be focused on La Liga, the Spanish soccer league and just like its predecessors will offer video highlights as NFTs. 

Details About the Platform 

This closed beta is in line with what both NBA Top Shot and NFL All Day did when they first launched. Their beta tests lasted for months before the general public could access the platforms, though it is not known how long the beta testing for LaLiga Golazos will last.

And just like with the other platforms, LaLiga Golazos is based on the Flow blockchain and will include content from 2005 up until the present. Given that it is based on a Spanish League, the assets and their details will appear in Spanish as well as English. Some of the details to be published alongside the NFTs will be match statistics and player information. 

When the beta launch goes live, LaLiga Golazos will also be releasing its first collection. This collection will chronicle some of the biggest rivalries among soccer teams in the league. These include  El Clásico,  the Madrid Derby, the El Gran Derbi, and the Basque Derby. With this, soccer fans can get their hands on a piece of history from their favourite clubs. 

The platform has also secured some high-profile ambassadors to promote it like  João Félix, Luka Modrić, Ansu Fati, and Marc-André ter Stegen. These players all have spots in top soccer clubs in the league and can bring even more attention to the marketplace from their fans around the world. 

And given how long the league has been in existence, its popularity around the world, and how successful both NBA Top Shot and NFL All Day have been, we can expect this platform to make waves as well. This also speaks to the changing ways that sports fans engage with their favourite leagues and teams. 

The Role of NFTs in Sport

Traditionally, sports fans would buy jerseys and memorabilia of their favourite teams and players and watch games with friends. 

But the emergence of digital assets and NFT platforms means that they can engage with these sports in a different way by actually owning top moments. And with the success of the platforms that Dapper Labs has released so far and the anticipation around LaLiga Golazos, this demand clearly cuts across different sports and in different countries. 

As NFT adoption within the sector grows even more, we could see more of these types of marketplaces and assets pop up for even more sports.

Earlier this week, news broke that about 300 NFTs had been moved out of the wallet address associated with Starry Night Capital into a Gnosis Safe address. Famously, Starry Night Capital is the NFT fund that was started by the founders of Three Arrows Capital (3AC). However, 3AC is currently going through bankruptcy proceedings and many believed that the assets being moved would be part of the liquidation process. 

We now have official confirmation of this thanks to Teneo, the liquidation company that is working with 3AC. As per an official statement released to CoinTelegraph, Tenos explained that it is currently gathering and assessing assets to maximize recoveries for 3AC’s creditors. Since the NFTs are part of the company’s assets, they too are being collected. 

Details About the Proceedings 

The 300 NFTs that Tenos has taken possession of are quite valuable, with a combined worth of roughly $35 million. This includes such pricey assets as the Pepe the Frog NFT Genesis which was sold for $3.5 million in 2021. At the same time, that pales in comparison to the $2.8 billion that the firm currently owes its creditors. 

The fund has been in existence since 2021 and was founded by Su Zhu, Kyle Davies, and a third anonymous founder who goes by the pseudonym Vincent Van Dough (VDV). The goal of Starry Night Capital was to invest in the best and most promising NFTs. At the height of its success, 3AC had over $10 billion in assets under its management. 

Sadly, this vision has fallen through, though Tenos was quick to state that the founders are cooperating with the liquidation process. 

“We would like to make clear that VVD [pseudonymous NFT collector Vincent Van Dough] has cooperated with the JLs [Joint Liquidators] in an effort to protect the value of these assets for the benefit of all relevant stakeholders and has sought to ensure that no Starry Night Portfolio assets would be disposed of improperly, or without sanction of the BVI Court if required,” the statement says. 

The company first filed for chapter 15 bankruptcy with a New York court on July 1, 2022. Its current situation is due to the collapse of the Terra ecosystem which happened earlier this year. There are no current details about how the NFTs will be liquidated and when exactly but once these are finalized, they will likely be made public.

The Collapse of an Empire 

When it was first announced, Starry Night Capital was considered a very promising fund for the NFT sector given the powerful hedge fund it was supported by. Sadly, the collapse of the Terra ecosystem has brought an end to this. As the fund dissolves and its assets are liquidated, one can only hope that something else emerges in its place. 

After all, while Starry Night Capital has come to an end, the NFT space itself has not. There are still many promising assets to be invested in and opportunities to be had.

What is your typical process for buying NFTs? Do you bid on single items and painstakingly refresh your web page over and over again hoping to secure it? Do you scour your favourite creator’s OpenSea page over and over, buying individual pieces? 

Well, you’d be pleased to know that OpenSea, arguably the biggest NFT marketplace in the world, has taken steps to make the buying and listing process easier for users. This comes as the site announced on October 5, 2022, that it has enabled bulk NFT buying and listing. This means that users can both buy NFTs in bulk and list them at the same time. 

“We’re officially live with bulk listing and buying! You can now list and buy up to 30 items in a single flow on OpenSea,” a tweet from the official OpenSea Twitter page says. 

Details About the Announcement 

As per the official social media post, OpenSea users can buy up to 30 NFTs in a single transaction. This is as long as the assets in question are from the same blockchain. As the OpenSea Twitter handle explains, this will save users gas fees that they would have paid in buying each item individually. 

As most people with experience in the NFT sector will tell you, gas fees can increase the cost of an asset significantly. Just this year, users found themselves paying thousands of dollars in gas fees during the Otherside NFT launch. With this new development, users can buy NFTs more cheaper. 

Then there is the convenience angle. Having to buy NFTs individually is time and effort-consuming. Buying multiple NFTs at once will save users this time and energy. This, in turn, means that NFT purchases will be made worlds easier and more akin to traditional e-commerce where you can add items to a virtual cart.

This also applies to creators who can list up to 30 items at once, rather than one at a time. 

“In your collected items tab you can access bulk listings by clicking on the “+” symbol when you hover over an item card or by clicking “list for sale” in the “More Options” drop-down. You’ll then be able to select up to 30 items to list at once,” OpenSea explains. 

Why This is Relevant

This development by OpenSea is perhaps one of its most exciting thus far because it addresses pain points for both creators and buyers. On the part of the creators, it makes listing items much easier. As we all know, creators often list entire collections as opposed to just one item and this feature means that they can do so with more ease. 

On the part of buyers, it means that they can bulk-buy NFTs. Besides the saving on gas fees, it also benefits those who want to get their hands on multiple pieces from high-demand collections at once. Now, buying multiple NFTs from OpenSea is as easy as buying multiple items of clothing from an eCommerce store and this can only benefit the platform in the long run.

Two of the very interesting ways that NFTs have been applied in the mainstream these days are in the fashion industry and in advocacy work. In terms of the former, we’ve seen fashion brands like Paco Rabbane and Louis Vuitton have launched NFT projects to raise funds and connect with fans respectively. In terms of the latter, we’ve seen NFTs launched by different organizations to commemorate or raise funds for good causes.

Now, the two are coming together thanks to renowned fashion house HUGO BOSS. As was recently announced, HUGO BOSS has teamed up with Imaginary Ones, a web3 company, to release an NFT collection. 

HUGO BOSSXImaginary Ones

This partnership is specifically for the creation of NFTs to commemorate World Mental Health Day, which falls on October 10, 2022. This is also HUGO BOSS’ first-ever NFT collection and marks its entry into the web3 space. This NFT collection, which will be launched in November, is called ‘Embrace Your Emotions’ (EYE) and will have 1,001 3D animations. 

Within this 1,001-piece collection, there will be five distinct categories. These categories represent five of the most common emotions among humans;  joy, sadness, fear, anger, and love. The message of this collection is that people should embrace all their emotions and this ties into the theme of World Mental Health Day. 

To commemorate the day, a sixth category will be created that encapsulates all the emotions at once. These NFTs, once sold, will see all their proceeds donated to Youth Aware of Mental Health, a mental health charity. 

HUGO BOSS has announced that 500 of the 1,001 NFT spots will be given to those who buy one of its physical t-shirts that come with a scannable QR code which directs them to a Snapchat lens with different features. While this project is one of HUGO BOSS’ first in the NFT space, the management of the fashion house has explained that it hopes to do even more moving forward. 

“The metaverse is an exciting new space for fashion brands, one that is rich with potential for HUGO. We are excited to partner with Imaginary Ones to deliver an NFT collection of beautiful 3D assets that enables us not only to further explore this virtual world, but also to share a message of self-acceptance and being true to yourself, which is at the heart of what HUGO stands for,” says Miah Sullivan, the Senior Vice President of Global Marketing & Brand Communications at HUGO BOSS. 

NFTs for Change 

When NFTs were first embraced by the fashion world, they were seen as mainly tools for money-making on the part of fashion houses. But this HUGO BOSS initiative shows that there is even more that can be done with NFTs by these houses. 

By tying the collection to World Mental Health Day, HUGO BOSS could start a trend among high fashion businesses of using NFTs not just for customer engagement and profit but also for the betterment of mankind.