User error costs Pudgy Penguins NFT trade $500,000

An unknown Pudgy Penguins NFT collector lost $500,000 after selling five of his NFTs for $35 each, worth well over $500,000.

The incident occurred in the early hours of December 31, and the community’s reaction was initially suspicious of users’ failure to double-check the currency used for the sale. Each NFT is listed at 35 USDC, and the price of 35 ETH, while high, is also a more realistic number.

Suspicions quickly arose when it was discovered that all five NFTs were snapped up by the same buyer. Rumor has it that the wallet may also be owned by the seller, with the sale being evidence of tax losses until the end of 2024.

How expensive is Chunky Penguin NFT?

As of this writing, the base price of the Pudgy Penguins NFT is 21.5 ETH (over $70,000) – although the 5 NFTs for sale here are believed to be worth much more.

Pudgy Penguins has its own internal market, and NFTs with similar characteristics to the 5 NFTs sold here are either already on the market or are being sold at more valuable prices than on the exchange.

The Pudgy Penguins NFT series is currently the second most valuable NFT avatar series. Pudgy Penguins overtook Bored Ape Yacht Club for the first time in early 2024 and firmly held the second position after launching the $PENGU token.

This puts the Pudgy Penguins NFT behind only CryptoPunks, which, as of this writing, has a base price of 37.25 ETH (over $125,000).

Is this a bug, or suspicious activity?

While these transactions may have been just a costly mistake, there are many reasons to suggest they were intentional and potentially fishy.

Each NFT sold within 10 minutes of each other for $35 USDC – meaning if this was a bug, it would be a series of 5 bugs in a row rather than one big bug. All five NFTs were also sold to the same wallet, which seems unlikely given the current situation.

Once news about the deal broke, many alternative theories emerged about the nature of the deal. Some see this as tax loss harvesting – incurring huge losses to avoid huge tax payments – while others believe that funds can be exchanged off-chain, while on-chain transactions are simply token payments.

Whatever the truth, there is no doubt that these transactions show that the NFT community is still very dynamic as 2024 comes to an end.