NFTs are facing a challenging time. First, a valuation crash hit, and then came accusations against renowned auction house Sotheby's, as well as notable celebrities like Paris Hilton, Justin Bieber, Madonna. Some investors alleged "misleading advertising" of Bored Ape Yacht Club NFTs, claiming that the auction house had artificially "manipulated the collection's price by inflating it."
In 2021, the prestigious auction house Sotheby's hosted a significant event in the digital art world: an auction of NFT collectibles from the Bored Ape Yacht Club collection. These NFTs, representing unique digital artworks belonging to an exclusive community, captured the attention of investors and enthusiasts worldwide. During the auction, various Bored Ape NFTs were put up for bid, each representing a distinct "bored ape." Sale prices exceeded all expectations, with a single NFT fetching an impressive value of over $1.5 million. Overall, the auction generated revenue surpassing $24 million, setting new records in the NFT market.
"Regrettably, the overly hyped Sotheby's auction proved to be a sham that served as a starting point for the massive scheme believed to have defrauded investors." This is noted in documents presented by the auction house to the federal court. What are we talking about?
Several factors triggered suspicion among investors. For instance, an anonymous buyer acquired a collection valued between $20 and $30 million for a staggering $51.7 million.
At first, in December, when investors filed the lawsuit, the auction house's name was not present in the proceedings. However, Sotheby's was later mentioned in documentation filed with the federal court in California in early August 2023. In addition to the auction house, the lawsuit named celebrities such as Paris Hilton, Justin Bieber, Serena Williams, Madonna, The Weeknd, Snoop Dogg, Kevin Hart, DJ Khaled, and others as involved parties. Significantly, Moonpay, a cryptocurrency company linked to Guy Oseary's venture capital firm, known for his historical connections to the American pop star of Italian descent, also found itself implicated in the lawsuit.
Investments in the NFT world continue, but they're not as robust as before.
As an example, in 2017, the CryptoPunks collection launched, showcasing 10,000 unique pixel art characters, and it had an average price of around $24. Today, some of these CryptoPunks have sold for millions of dollars each, with a peak of over $7 million for a single piece. In July 2023, "CryptoPunk #7523" was the most expensive, purchased by an anonymous buyer for $11.7 million. The third spot on the podium is occupied by a Larva Labs NFT, Punk #7804, resold for $2.5 million.
During the first quarter of 2022, invested dollar volume experienced a 5% decline when compared to 2021. Furthermore, according to the Non Fungible platform, while there was a 21,000% growth between 2020 and 2021, there was a 50% decline in value between 2021 and the first quarter of 2022. To put these percentages into numbers, the NFT market was worth about $150 million in 2020, which surged to $17 billion in 2021. In August 2023, according to Coinbase:
"The NFT price is down 99.93% from its all-time high of €25.71, with a circulating supply just under 36.9 million NFTs."
Viola Meacci, student of Biomedical Engineering at the University of Pisa, has always been interested in the world of journalism. In her job, she explored the world of blockchain, cryptocurrencies, NFT and metaverse which she now very is passionate about it .