NFT investor accidentally burns $135k of cryptopunk while trying to borrow money
A non-fungible token (NFT) from the Cryptopunks collection of 77 Ether (ETH) was sent to a burn address for permanent destruction. However, the intention of the collector was just to borrow some money against it to buy another NFT.
NFT collector Brandon Riley paid 77 ETH to add Cryptopunk #685 to his collection on March 13, hoping to keep it for a long time.
As a seasoned investor, Riley knew the importance of purchasing new NFTs just before crypto markets embarked on a new bull market. As a result, he decided to borrow some money against Cryptopunk #685 using a popular technique known as rapping.
While going through the unfamiliar process of wrapping the NFT, Riley mistakenly sent the asset to the burn address – which permanently removed the NFT from circulation, as shown below.
Trading History of Cryptopunk $#685. Source: dappradar.com
“I was told to follow the instructions exactly, so I did,” Riley explained, “but in the process, he lost 77 ETH, worth $135,372.16.” he explained:
“I wasn’t wrapping this punk to sell it on Blur. It was to be my “Punk Forever”. Was.”
While members of Crypto Twitter believed that the NFT collector must have “deep pockets,” Riley denied the rumors, revealing that he purchased Cryptopunk #685 with borrowed money.
“I guess I shouldn’t have attempted this on my own,” was Riley’s takeaway from the puzzle. On the other hand, Crypto Twitter also blamed the confusing user interface and complicated instructions for investor losses. As a result, the community unanimously agreed on the need to improve front-end processes for the crypto ecosystem.
Connected: Improving Bitcoin NFT Marketplace Infrastructure Sets the Stage for Ecosystem Growth
NFT wash trading increased by 126% in February, CoinGecko reports. Top six NFT marketplaces – Magic Eden, OpenSea, Blur, X2Y2, Cryptopunks and Looks Rare. X2Y2, Blur and Looks Rare — saw wash trading increase for the fourth straight month, with a total volume of $580 million.
NFT Wash Trading Volume, January 2022-February 2023. Source: CoinGecko, Footprint Analytics
As Cointelegraph previously reported, the issue of wash trading stems from a lack of clear regulations.
magazine: 4 out of 10 NFT sales are fake: Learn to recognize the signs of wash trading