CryptoPunk Acquired For Fraction Of Its Value Through Smart Contract

According to Cointelegraph, a CryptoPunk worth millions was acquired for a fraction of its value through a smart contract, surprising onlookers who described the event as either a “heist” or a brilliant play. CryptoPunks are among the most expensive non-fungible tokens (NFTs) available. Due to their high value, some owners have chosen to fractionalize these NFTs, splitting ownership into smaller parts. Utilizing smart contract mechanisms that allow for fractionalization, a trader managed to acquire a CryptoPunk with current bids of over 600 Ether (ETH), worth approximately $1.5 million, for just 10 ETH ($23,000). Punk #2386, a rare Ape-themed CryptoPunk with a headband and small shades, was one of the NFTs fractionalized through a now-defunct platform called Niftex. According to the pseudonymous developer 0xQuit, the NFT was divided into 10,000 parts with 257 owners in 2020. Despite the decommissioning of the Niftex platform, the smart contracts remained active on the blockchain, enabling a trader to trigger a mechanism that allows a buyout. The developer explained that the setup permitted any shareholder to propose a “shotgun,” giving them the opportunity to purchase the piece after setting a price. If no one counters their bid, the asset is transferred after 14 days. On August 28, a trader proposed a buyout for only 10 ETH. Pseudonymous NFT collector gmoneyNFT noticed and attempted to block the shotgun but was unable to set a proper counterbid, allowing the buyout to proceed. The NFT was acquired at a fraction of its actual value. According to the CryptoPunks site, the NFT had bids of about 900 ETH (around $2 million) in January. On September 6, CryptoPunk #6915, an Ape-themed Punk with a cap, an earring, and an eye patch, sold for $1.5 million. The NFT community expressed varied opinions about the CryptoPunk acquisition. One community member described the sale as “one of the biggest CryptoPunk heists of all time,” while 0xQuit referred to it as the “steal of the century.” However, gmoneyNFT, who tried to block the sale with a counterbid, believes the trader played by the rules.