TLDR
- A CryptoPunk NFT worth $1.5 million was purchased for only $23,000
- The NFT had been fractionalized into 10,000 shares on a defunct platform
- The buyer used a smart contract loophole to acquire the entire NFT
- Current owner has received a bid of 600 ETH, potentially earning a 60x return
- The sale highlights the unpredictable nature of decentralized systems
On Wednesday, a rare CryptoPunk NFT valued at approximately $1.5 million was acquired for just over $23,000, sparking discussions about blockchain technology and smart contract vulnerabilities.
The sale of CryptoPunk #2386, one of only 24 ape-themed NFTs in the 10,000-piece collection, occurred due to a combination of factors involving a defunct trading platform and a clever use of existing smart contract features.
The story begins in 2020 when the original owner of CryptoPunk #2386 decided to fractionalize the NFT through a platform called Niftex. This process involved locking the NFT in an Ethereum smart contract and dividing ownership rights into 10,000 ERC-20 tokens.
This allowed multiple investors to own shares of the valuable digital asset, with 257 fractional holders eventually participating.
Punk 2386, with a current high bid of 600 eth, sold for 10 ETH today.
A combination of clever sleuthing, followed by an unfortunate miscalculation leads to a 7 figure payday for 0x282.
— Quit (@0xQuit) September 11, 2024
However, Niftex later ceased operations, leaving these fractional NFT holders in a difficult position. While the platform was no longer active, the smart contract governing the fractionalized ownership remained valid on the Ethereum blockchain.
This situation created an opportunity for a savvy buyer to acquire the entire NFT at a fraction of its market value.
The buyer initiated a process known as a “shotgun” offer on August 28, as explained by smart contract developer @0xquit on Twitter.
This feature, built into the original smart contract, allowed any shareholder to propose a buyout price. If no one countered the offer within 14 days, the proposer could purchase the entire asset.
The buyer offered 0.001 ETH per share, totaling 10 ETH (approximately $23,000) for all 10,000 shares. With the Niftex platform inactive, most fractional owners were unaware of this offer, and the 14-day countdown began quietly.
One of the fractional shareholders, a well-known NFT investor who goes by the pseudonym Gmoney, attempted to block the purchase by countering the offer.
However, Gmoney miscalculated the required amount and failed to prevent the sale. Despite seeking help from blockchain experts, the attempt to stop the transaction was unsuccessful.
As a result, the buyer successfully acquired CryptoPunk #2386 for a mere 10 ETH, far below its estimated value of 600 ETH (about $1.5 million). The sale has been dubbed by some as “the steal of the century” in the NFT world.
My goodness.
A thread about how this ape, worth $1.5mn, just sold for $23k.
Worth a read.
What a crazy space we live in. https://t.co/hhGN9zmDOd
— Stats (@punk9059) September 11, 2024
The identity of the new owner remains unknown, and as of the time of writing, the NFT is not listed for sale. However, it has already received a bid from an interested buyer for 600 ETH.
If the new owner decides to sell at this price, they stand to make a 60x return on their investment in a very short time.
This incident has sparked debate within the crypto community. Some view it as a clever move by the buyer, while others see it as a cautionary tale about the risks associated with fractionalized NFTs and inactive platforms.
Gmoney, one of the affected fractional owners, took a philosophical stance on the matter, stating,
“If you want decentralized systems, you have to take the good with the bad. It’s part of the game.”
