A cryptocurrency transaction made some serious waves on Thursday night when a CryptoPunk non-fungible-token (NFT) was purchased for an unfathomable $530 million or 124,460 Ethereum (ETH). This would be a record for an NFT sale, but also for the sale of any "artwork" in history. That would be the case if this was actually a real sale of property between two parties. Some more intrepid crypto analysts did some detective work and have pointed out that this is likely a publicity stunt involving three wallets and one person.
Now, I am just a mere turdminer who thinks this crypto market is an elaborate scheme, but this $530 million NFT transaction truly highlights the corruption and potential for money laundering in the extremely illiquid market. The NFT purchase involved three cryptocurrency wallets. The person in question transferred the NFT from Wallet 1 to Wallet 2, Wallet 3 then purchased the NFT for $530 million from Wallet 2, immediately transferring it to Wallet 1. It appears the reason the transaction was done in this manner is because the purchaser was issued a "flash loan."
you can see it here:— mariano.eth ✨ᕙ༼💦༽ᕗ✨ | 🦇🔊 (@nanexcool) October 29, 2021
0x9b5a flash loans 124,457 ETH from many sources
0x9b5a pays 124,457 ETH to the punk contract
punk contract sends it to 0x8e39
0x8e39 sends back to 0x9b5a
0x9b5a repays loan
genius 😄https://t.co/nlo24twyEx pic.twitter.com/suPOMHRV7O
A similar flash loan transaction happened back in February when a HashMark NFT sold for 139,000 ETH. Yesterday's CryptoPunk transaction really does put a spotlight on the NFT market's inefficiencies and need for regulation. In this scenario, the NFT investor was able to take advantage of leverage to generate attention for their beloved pixelated image and they have already listed the NFT for sale again for the low low price of $1 billion.
This CryptoPunk NFT transaction really might make your head hurt. Hell, the entire cryptocurrency market is confounding to some folks, but it's hard to not look at the use of leverage here and just add it to the pile of evidence that we have of excessive risk-taking in the broader financial markets. It's entirely possible that these extremely illiquid financial instruments are being used to launder money, so it seems like it will just be a matter of time until regulators come calling.
What do you make of all of this news? Do flash loans sound like a scam? Would you buy an NFT? Do you own any cryptocurrency? Do you think they are dumb? Let us know in the Shacknews Chatty comments thread below. We really want to hear your opinion.
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.
Captain Business posted a new article, Individual buys CryptoPunk NFT from themselves for record $530 million
This article needs to elaborate on how I get a $530,000,000 loan without a credit check or the counterparties even knowing who I am. I have good intentions, I promise.