$56.3M CryptoPunk NFT Sale Raises Eyebrows, Community Suspects Marketing Stunt

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

About Author

Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

Share

Last updated:

October 4, 2024 04:32 EDT

Why Trust Cryptonews

With over a decade of crypto coverage, Cryptonews delivers authoritative insights you can rely on. Our veteran team of journalists and analysts combines in-depth market knowledge with hands-on testing of blockchain technologies. We maintain strict editorial standards, ensuring factual accuracy and impartial reporting on both established cryptocurrencies and emerging projects. Our longstanding presence in the industry and commitment to quality journalism make Cryptonews a trusted source in the dynamic world of digital assets. Read more about Cryptonews

CryptoPunk 1563 was reportedly sold for 24,000 ETH, or $56.3m, in a seemingly groundbreaking transaction on Thursday. This sale is among the top-priced transactions for a CryptoPunk NFT so far.

However, the transaction was far from typical.

On closer examination, the sale appears to have used a flash loan. This means funds were borrowed and repaid within the same blockchain transaction. Consequently, this left ownership and value unchanged.

An on-chain detective, 0xQuit, revealed more details. According to them, the flash loan was likely an attempt to market an upcoming meme coin called “Kamala Harris Punk.” This suggests the sale was orchestrated to generate interest in the token’s presale.

Flash Loan Enables $56M CryptoPunk NFT Sale, Sparking Authenticity Concerns

0xQuit pointed out that the DeFi protocol Balancer sourced the flash loan. This enabled the transaction without any real value exchange. Previously, this tactic has fueled doubts about the authenticity or motives of similar high-profile NFT sales.

In a single transaction, the “buyer” took out a 24,000 ETH loan from Balancer, which the “seller” then repaid. Despite the complex process, no profit was generated. Only network fees were paid, and the Punk was merely moved between wallets.

The CryptoPunk, featuring a pixelated woman with dark hair and blue eyes, was previously listed for a fraction of its recent price. It was purchased for about $69,000 in ETH in September, with no standout traits to explain the sharp rise in value. As a “floor Punk,” it typically trades at the lower end of the collection’s prices, making its 81,000% increase within weeks baffling to many.

Flash Loans in NFT Sales Highlight Growing Use of Marketing Strategies

Flash loans have been used in similar transactions before, like when a CryptoPunk was “sold” for $532m, but was later dismissed by the crypto community for lacking real financial transfer. In the case of CryptoPunk 1563, it’s suggested that the NFT could be auctioned off after a token presale, where the developer might gain more from the token sale and the auction than from the initial NFT transaction.

This incident highlights the creative financial tactics often seen in the crypto and NFT spaces. It shows that these transactions aren’t just about transferring ownership but also about marketing and generating interest in related projects or tokens.