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May 25, 2022, 5:22 a.m. EDT

High-profile NFT auctions from Beeple, Madonna flop amid crypto crash

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By Lydia Moynihan

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One report suggests 50% of all NFT owners have  lost access  to their NFTs.  One user on Discord , a popular messaging app in the crypto and NFT world, recently posted that he was leaving out of frustration it was a hotbed for NFT chatter. “NFTs are a scam in many cases,” the user said, adding that a growing number of investors are “being completely screwed by NFTs.”

The number of active NFT buyers and sellers in the second quarter has plateaued around 500,000 — that’s down from a high of nearly one million in the first quarter and around 700,000 in the fourth quarter of 2021.

Ian Rosen, partner at The Tifin Group and former CEO of StockTwits, likened the NFT craze to the obsession with cabbage patch dolls or beanie babies.

“People think, ‘Hey, I made a picture and put it on OpenSea!’” Rosen said. “But just because it exists in the digital world doesn’t make it valuable.”

Still, those in the NFT space remain optimistic.

“With nearly $8 billion traded in the first quarter of 2022, the market cannot really be considered to have collapsed. We are seeing more of a form of stabilization,” NonFungible notes in a  recent report .

Critics, however, point out it can be difficult to determine what companies are choosing to measure and whether it’s accurate. For instance, so-called wash trading — when sellers buy their own NFTs using two different accounts — can make platforms look like they have more activity than they really do.

“You’re not allowed to sell a fake Rembrandt, but we don’t see that kind of control here so people are getting burned,” Bell says. “There’s issues of blatant fraud where people drive up the price of NFTs by buying their own.”

That points to a broader issue with NFTs: The burgeoning sector is still new and largely unregulated. Until it’s a more regulated space, its up to users to guard their pocketbooks.

“Mom and dad aren’t going to protect you,” Rosen cautions. “If you don’t know who the sucker at the poker table is, it’s you.”

This article was first published on NYPost.com

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