CryptoPunk 1563 transaction raises questions
Cryptopunk This afternoon, 1563 sold for 24,000 ETH, or $56.3 million, which appears to be a massive deal. However, a number of obvious and subtle red flags have emerged, raising concerns about the legality of the sale.
Approximately $69,000 in ETH was spent purchasing CryptoPunk 1563 in September. Since there are no rare properties, there is no reason why this extensive analysis of on-chain data would indicate that the transaction was part of a flash loan scheme. The purchase was made through a flash loan, an unsecured cryptocurrency loan that needs to be repaid in one transaction. The NFT buyer borrowed $24,000 in ETH from DeFi protocol Balancer and paid it back in one transaction. While NFTs do move between wallets, no actual currency changes hands as the provider repays the loan. Buyers only need to pay the Internet fee.
This is not the first time such flash loan applications have appeared. In October 2021, someone paid a staggering $532 million to buy CryptoPunk using a flash loan, only to have the money returned in the same transaction. Although the incident made headlines during the NFT market boom, the sale is not considered legitimate by CryptoPunks creator Larva Labs or other NFT data platforms.
Source: Cryptopunk
The case took an unexpected turn. According to on-chain investigator 0xQuit, this latest flash loan may be linked to an upcoming meme coin called “Kamala Harris Punk.” The sale appears to be a stunt designed to generate interest in the token pre-sale. The NFT will be sold to the highest bidder after a week-long pre-sale phase. The developers appear to be betting that the revenue generated through a combination of NFT sales and token pre-sales will be higher than Punk’s current floor price (about $63,400 worth of ETH).
While the goal is to raise interest and capital through pre-sales, this strategy can backfire. If the stunt doesn’t attract enough attention or bidders, it could end up being a costly gamble. The seller hopes to recoup the amount raised in the pre-sale through CryptoPunk’s final auction, but there are no guarantees.
Excluding today’s questionable sale, CryptoPunks’ trading volume over the past 30 days was approximately $16.7 million, according to CryptoSlam. CryptoPunk’s highest legal purchase occurred in February 2022, when one sold for nearly $24 million worth of ETH. That particular punk was recently resold for an undisclosed amount.
