Non-fungible tokens (NFTs), especially the right ones, can be overwhelmingly valuable. There’s no questioning that fact. Some of these digital tokens have sold for tens of millions of dollars. 

One of the most valuable collections in the space is known as CryptoPunks, a collection of 10,000 pixelated punk cartoons, each with its own unique mix of clothing, apparel, and facial expression. At the moment, the floor price on these digital collectibles is 100 ETH, which works out to nearly $450,000. 

However, one CryptoPunk sale, the sale of #9989, has been circling around the metaverse as the largest sale in NFT history. In fact, if the sale was a real deal, it would be the largest sale in art history, period! 

NFT Owner Sells Himself a CryptoPunk for $532 Million

The sale took place last week, sending Twitter feeds buzzing. A CryptoPunk, #9998 was officially sold for 124,457 ETH, which at the time of the transaction, worked out to about $532 million. In a note on the blockchain, the buyer simply said, “looks rare.”

To put that into perspective, the highest amount paid for a physical piece of art was $450.3 million. The sale took place in November 2017 when the Salvator Mundi painting by Leonardo da Vinci traded hands. 

So, if the CryptoPUnk #9998 transaction was real, it wouldn’t have only been the highest priced sale of art in history, it would have smashed the record by more than $81 million! That’s one heck of a sale. Unfortunately, it turned out to be fictitious as news broke that the owner of the Punk sold it to himself. 

According to Larva Labs, the creators of the CryptoPunks collection, a user under the nickname blurr bought a token with an instant loan and repaid the loan with the same transaction. However, digging deeper, it wasn’t just one loan. 

The buyer of the token took out several flash loans, which are smart contracts living on the blockchain that offer true security in lending transactions. Through the series of flash loans, the owner of the CryptoPunk raised 124,457.07 ETH, then used the money he received from the flash loans to purchase CryptoPunk #9998 with another one of his wallets. 

Once the CryptoPunk was transferred, he returned the money borrowed through the flash loans, and barring the $800 in commissions he spent on the ruse, ended up whole, with his money and Punk intact. 

In fact, blurr later listed the same CryptoPunk for sale for a whopping 250,000 ETH, which works out to well over a billion dollars. 

Legality & Morality

This isn’t the first time flash loans have been used to make absurdly high-priced purchases of the buyer’s own NFTs in the past and Larva Labs argues that the transactions like these aren’t technically legal. In a statement, the company said:

“Some of the recent big bets have been done in the same way. Ethereum was offered and removed in one transaction. Although the application is technically valid, it cannot be accepted.”

So, what’s the big deal?

NFTs, cryptocurrencies, and just about any other asset in the world follow the law of supply and demand, and for the most part, communal pricing. This means that when supplies are low and demand is high, the price of the asset must go up. In the NFT space, the finite supply of these tokens is what makes them so valuable. 

However, if several fake transactions take place, the price of the asset can be artificially inflated. Let’s say you’re investing in the stock market and a big time investor purchases a massive amount of shares in a stock you own. When this happens, the transaction will tip the scales of supply and demand, sending the price up. If that transaction wasn’t real, it would be considered securities fraud and likely be the result of hundreds of thousands, if not millions, of dollars lost for investors. 

Ultimately, transactions like these game the system, and simply shouldn’t happen in a fair and equitable market. That’s why Larva Labs publicly announced that it’s working to add filters to notifications so that invalid transactions based on flash loans aren’t available on their network. At the same time, analytical services like CryptoSlam are deleting the data from the transaction in their records. 

CryptoPunks Are Some of the Most Expensive NFTs in Existence 

CryptoPunks were one of the first NFT collections to gain real popularity among the community, and over time, have grown to be worth a significant amount of money. Remember, the floor price, or the bottom price you can buy one of these collectibles for, is 100 ETH, around $450,000!

However, some in the collection fetch a much higher price tag. 

In fact, the most expensive token from the collection, #7523, sold in June for 4,520 ETH, which at the time, worked out to around $11.8 million. Around the same time, the owner of CryptoPunk #6046 was offered 2,500 ETH to sell his collectible and refused the sale. At the time, that was like refusing $9.49 million in cash. 

The Bottom Line

The bottom line here is that NFTs are overwhelmingly valuable. So valuable in fact that some people are working to game the system with transactions like the one outlined above. Nonetheless, the industry is hitting back, putting rules into effect that provide a safer, more equitable market for all. 

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