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Ethereum NFT Fraud Fame Lady Squad: ‘Sorry for the Lie’

The popular project’s creators lied about their gender. Following a backlash from collectors, they’ve now relinquished control.

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The crypto industry’s pseudonymous structure can make it impossible to know where projects come from properly—and to trust who’s behind them—as the market for NFT digital artifacts grows. For example, many NFT collectors learned the hard way this week when the developers of a well-known women-centric project acknowledged lying about their gender.

According to its Twitter page, Fame Lady Squad (FLS) is an Ethereum-based NFT collection that began in July and claims to be the “first female avatar project of all time.”

The Fame Lady Squad NFTs, allegedly made by a trio of women named Cindy, Kelda, and Andrea, were swiftly minted and picked up by collectors. A passionate fan base grew up around the project, and secondary market prices began to rise.

Even investor and social media influencer Gary Vaynerchuk—an NFT inventor and new owner of a $3.7 million CryptoPunk NFT—spoke out in support of Fame Lady Squad on Twitter. In addition, the idea was featured in a recent article in The New Yorker. So fame Lady Squad appeared to be prepared to continue gaining popularity, despite a recent increase in NFT market trade activity.

However, in recent days, doubts about the Fame Lady Squad project’s origins have grown louder. Twitter sleuths like @FedorLinnik, @dearesthaley, and @NFT Marty provided extensive Twitter threads connecting the dots between several recent NFT collectibles projects, like Cyber City Girls Club and Unicorn GG Club, that appeared to come from the same source or share creators.

Pranksy, a well-known NFT collector, said on Tuesday that after purchasing a Cyber City NFT, they “failed to perform my own research adequately” and that it was “created by a dev team that seems to be churning out a new project daily.”

“The questions here are what actually makes a [profile picture] project valuable?” Pranksy asked, adding that the crew had been “so brash” about promoting its next project, Unicorn GG Club. Are the development team, the community, and the time it took to create it worth it?”

While they are valid considerations for NFT collectors to consider, the Twitter allegations progressively pointed to project creators providing incorrect information. For example, FedorLinnik, a developer behind several crypto ventures, claimed the evidence led to a gang of Russian guys who were “mining new NFT projects like a conveyor” this spring. Instead, they seemed to be behind Fame Lady Squad as well as the other new enterprises.

Coming Clean

Although the developers of Fame Lady Squad first resisted, citing “false accusations” and claiming rivalry from competitor NFT designers, they later dropped the ruse under mounting criticism from the collector community.

Max Rand, a developer, tweeted on Tuesday that he was one of the persons behind the Fame Lady Squad and other initiatives, along with a couple of collaborators: D Mefi, who had his Twitter account briefly removed, and another unknown associate. Rand tweeted, “Sorry for the lie.  I was hesitant to say this because of [a] lot of threats on my side, my stupidity, and my lack of grasp of US market culture rules,” says the author.

The official Twitter account of the Fame Lady Squad went even further with its explanation. “Let’s be clear: Fame Lady Squad was built by a male crew, and we apologize for not disclosing this earlier. But that doesn’t mean it’s a ruse or a fraud,” the team wrote on Twitter. “We saw that there are very few female-led projects in the space. And, because we are fascinated by women’s strength, we were able to complete this successful project.”

Meanwhile, in a tweet thread, the Cyber City Girls Club NFT project—which was previously credited to a pair of Asian-American women developers—explained its own fraud.

The tweet thread began, “Sorry to everyone who had invested into our idea because it was made only by two Asian women. CCGC was founded by a group of six people, only two of whom were female. But, we’ll extend the plan and provide holders greater value. Good night!” says the narrator.

Even though the Unicorn GG Club NFT project didn’t have the same kind of significant false representation issue at its heart, the development team—including Rand and D Mefi—decided to halt sales of NFTs in the wake of the larger scandal. “I’m not trying to get away; I’m simply clearing my mind,” co-creator “Trible Penguin” tweeted from the official account. “We don’t do [expletive] rug pulls Memecoin, but I’m terrified of the bullying. So I apologize for the delay.”

The Queenship NFT project, which displays images of Black women and was reportedly made by Black women, has yet to be authenticated by the same developers. The Legendary Lady Squad Rand denied his role after Twitter rejected the connection earlier this week. The Queenship website is no longer accessible, and the project’s most recent tweets from Monday raged against rumors about its origins.

Following a recent giveaway promotion, the team behind NFT Project Bulls On the Block—which some Twitter sleuths suspected was also affiliated with the same developers—denied any relationship with the FLS founders.

A Change of Plans

To put it mildly, it’s a disaster. Collectors who bought NFTs from the Fame Lady Squad, in particular, believe they were tricked into thinking they were investing in a project made by and for an under-represented group in the crypto industry. As a result, collectors sought to panic-sell their FLS NFTs on the secondary market OpenSea yesterday, fearing waning demand amidst what appears to be an impossible road forward for the project.

The creators of Fame Lady Squad, on their part, are attempting to make amends in the form of money. Rand said that he and his partners will create a $100,000 grant fund to assist new NFT projects and artists and that it will start “soon” in “a few days,” according to Decrypt. Unicorn GG also stated that it had donated 5 ETH (about $15,700) to the Virunga National Park in the Democratic Republic of the Congo, using an Etherscan link as proof.

Disturbed by yesterday’s disclosures and the circulating charges in the days before, several prominent members of the Fame Lady Squad community began advocating for a different kind of settlement to give the project a future. In response to Rand’s confession tweet on Tuesday, noted NFT collector Artchick outlined a possible path forward.

“This is over for you,” Artchick told Rand. “If you want to do the right thing, I can broker a deal where you hand over control of your smart contract, and holders of FLS NFTs have a chance to recoup their losses and potentially thrive. After that, put the contract in the hands of the community.”

That is precisely what occurred. After submitting the matter to a Twitter vote, the Fame Lady Squad developers gave her control of the NFT project’s smart contract. Artchick then passed the contract on to “Bored Becky,” a notable FLS community member who will oversee the project with the help of other FLS members.

The developers will no longer profit from secondary sales, according to Artchick’s tweets.

When asked why his team relinquished ownership of Fame Lady Squad, Rand stated, “Because the community wanted it,” smiling. D Mefi, a co-creator, responded to a tweet defending his team’s conduct today, saying, “We didn’t screw anyone. Instead, we built a project that helped many people while also introducing many new people to the place. I understand your dissatisfaction; we apologized for our error and made good decisions to allow FLS to grow once more.”

Collectors applauded the action, and community members immediately began discussing the new road forward after secondary market prices for the NFTs soared back above levels observed before the team’s confession. However, no equivalent intentions for transferring control of the connected NFT initiatives have been revealed.

After such upsetting revelations, the Fame Lady Squad community appears to have found a happy resolution. However, it’s uncertain whether the recently established Cyber City Girls Club project can recover following this week’s news: NFTs are trading for about 0.01 ETH (about $32) on OpenSea, compared to a floor of 0.13 (roughly $420) for FLS collectibles.

Pranksy’s aforementioned tweet explored what made NFT avatar collections valuable, and as this case indicates, the claimed genesis narrative and the perceived value of artwork can be linked. Of course, it’s a subjective thing, but when that worth is built on fabrications—which isn’t helped by the anonymity of crypto—investors might be tricked and end up with NFTs that have lost a lot of their predicted value.

Not every story like this will have a happy ending.

ART & COLLECTABLES

In June, the volume of Ethereum NFT trading decreased by 70%, although sales remained stable

Although there is less money in NFTs, sales haven’t really slowed down.

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Despite the negative market, there is some good news regarding NFTs.

According to Nansen data, the overall amount of Ethereum NFT trades has decreased by 55% over the past month, falling from 1.3 million ETH to roughly 584,000 ETH. In terms of US dollars, that represents a decline of about 70% from just under $2.6 billion to about $672 million.

Over the past month, Ethereum’s price has decreased by around 43%. But because “blue chip” NFT prices haven’t increased to make up for it, fewer transactions are taking place.

Bored Ape Yacht Club NFT prices are still circling about 100 ETH among the top five listed NFT collections on OpenSea, with average ETH prices having essentially remained unchanged. The exception is CryptoPunks, whose buy-in floor pricing increased by 48 percent in part as a result of Christie’s head of digital sales taking over as the Punks’ new brand lead this month.

The unique blockchain tokens that represent ownership over digital art are still being bought and sold by NFT traders; they’re just purchasing less expensive tokens and “aping” into free mints like Goblintown, which launched a wave of free-to-mint NFT collections centered around bodily waste, nihilism, and memes.

According to data from CryptoSlam, the typical sale price for an Ethereum NFT dropped from $2,463 in May to barely $703, a 71% reduction. While a result, NFTs are often more expensive to buy as the crypto bear market persists.

OpenSea reported 1.478 million NFTs were sold on its platform in May. As of Wednesday, 1.476 million NFTs have been sold in June, thus it’s entirely probable that this month will see an increase in NFT sales over May. The Otherside NFTs from Yuga Labs, which saw $561 million traded in just one day, also significantly helped May’s results.

According to Dune data, the total number of registered users who have completed at least one transaction on OpenSea’s marketplace increased by a modest 6.5 percent. With a 16 percent drop from roughly 422,000 to 354,000, the number of active traders for Ethereum NFTs has only marginally decreased.

Nansen data show that there hasn’t been much of a reduction in the number of weekly active NFT projects that are seeing revenues. Three NFT collections—the same number as last month—have seen more than 10,000 sales. Only 30% fewer collections this month—from 109 to 76—saw more than a thousand sales in a given period. Therefore, NFT designers are still making sales, especially in collections with the biggest market caps.

Consequently, traders are still making trades even though overall volume may be down 55 to 70 percent in ETH and USD, respectively. Despite the fact that they are currently buying and selling for less, it appears that NFT aficionados still have hope.

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NFT

Users’ email addresses are massively exposed due to an OpenSea data breach

The NFT marketplace stated that it has informed law enforcement of the occurrence and that an investigation is in progress.

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The largest nonfungible tokens (NFT) marketplace in the world, OpenSea, has issued a warning to users after learning that a Customer.io employee may have sent the list of OpenSea users’ email addresses to a third party while working on the platform for managing email newsletters and campaigns.

All users who have provided their email addresses to the marketplace, whether it be for the platform or its newsletter, have been impacted by the incident. OpenSea warned consumers about potential phishing attempts after the hack.

On Thursday, the NFT market reported that it had spoken to law enforcement about the incident and that a probe was ongoing.

The most recent data breach is far from the only significant attack this year on OpenSea and its subscribers. The popular NFT marketplace’s Discord server was compromised in May, which sparked a flood of phishing attacks. Numerous user wallets were in fact abused. The platform experienced one of its most severe attacks to date in January, during which a vulnerability allowed attackers to sell NFTs without authorization. The market covered losses of $1.8 million.

Customer.io rival Hubspot was breached in March, exposing users’ usernames, contact information, and email addresses on BlockFi, Swan Bitcoin, NYDIG, and Circle. Names, phone numbers, and email addresses of users of various platforms were disclosed to an unidentified entity.

Hackers may try to contact OpenSea clients by sending emails from domains that resemble OpenSea.io or OpenSea.xyz, according to a warning from OpenSea. Spam calls, texts, and emails have all increased, according to Twitter users.

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NFT

The Future of NFT Gaming Doesn’t Rely on Big Capital Expenditures

Large game publishers typically oppose your ability to trade freely. The economic model used in popular games, where players purchase in-game cash or points in order to unlock more content and improve their experience, is at existential risk from NFTs (non-fungible tokens).

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If it were possible to regulate the flow of NFTs in a closed market, this would be a different story. Interoperability will be key in the future, according to industry upstarts, and digital assets represented by NFTs will be portable from one platform to another.

Large gaming companies generate billions of dollars from microtransactions, and a key factor in their success is their ability to retain players willing to pay money for in-game items. These businesses have developed systems that entirely exclude any legitimate third-party access to certain material or digital assets because they want their player base to invest a lot of money in the game.

NFTs have the potential to be revolutionary since they open the door for broad lending of these assets in addition to allowing speculators to profit. It’s no longer necessary for a player to put a significant number of money into the game in order to fully enjoy it by enabling investors to purchase an NFT and then loan it out to someone – either for a fee or a profit-split arrangement.

How play-to-earn is implemented

A fully developed gaming ecosystem will see the emergence of two different types of stakeholders. Investors who have a sizable portfolio of in-game NFTs are less likely to play the game in exchange for a daily return of $50. Then there are gamers from all over the world, who in certain circumstances would make significantly more money than the minimum wage under a profit-sharing system for lending.

The second category, who can have less money, is more worried about the short-term volatility and low liquidity of digital assets. They are unable to take the risk of accumulating NFTs in the hopes that they will be steadily profitable and hold or increase in value.

In the gaming industry, tradeable digital assets already exist. However, the practice of putting these assets on the blockchain is expanding; this was a general trend in 2021, when NFTs earned $8.4 billion in revenue. The logical next step for this sector is video games, and since more and more of these sales are shifting to blockchain gaming, there may soon be a noticeable increase in established companies moving in-game objects, characters, and skins on-chain.

As opposed to nominally belonging to the investor or player but really being at the mercy of a centralized gaming platform that can ban the user at any time, on-chain assets are designated as unique and belonging to one true owner. It’s more decentralized and provides users a lot more room to choose their own routes, especially when it comes to lending in-game items and lowering entrance barriers.

creating the framework for play-to-earn players to borrow If NFTs result in a rapid expansion of the player base in new markets, they can be extremely advantageous for game producers. Even before one considers how digital assets might be coded to meet cross-platform use cases or be employed in metaverses, making the industry more accessible irrevocably alters the entire landscape.

The compatibility of digital resources

The idea of full cross-metaverse employment of NFTs on a single digital identity raises a host of hitherto unimagined benefits. As a result, potential value is unlocked and speculation may be brought under control in a less erratic and more stable market.

The restrictions must be adjusted and will be based on the rarity of particular assets and what you may do with them. Can they be upgraded? Can you construct on NFT land to increase its value? Should players be able to own an entire mountain, or can they only purchase plots? It will be entirely community-driven if gamers own everything, but creators should have some voice and may feel the need to impose restrictions.

It is likely that a DAO (decentralized autonomous organization) operated system, in which the entire globe is owned by members and NFT holders, is now being developed. However, it is unclear whether this will be sustainable without a rigid set of regulations.

establishing NFT financing

When you attempt to transfer an actual NFT to another user’s digital wallet, problems happen. You would want the loanee to post collateral to secure the loan because there is a danger of the loanee defaulting. This creates a capital cost that acts as a barrier to entry for a sizable number of potential players.

A preferable approach would be one in which the NFT’s utility, or “wrapped,” is the sole thing rented out. An NFT holder can put the asset in a smart contract, specify the loan terms, post it for rent on the market, and let the free market function as it should.

The wrapped NFT is a newly created copy that has the same metadata, URLs, and other characteristics as the original and can be programmed to expire after a specific date. By doing so, the human-trust layer is removed, and the remarkable security that blockchains offer is provided. In essence, this wrapped NFT is only useful and cannot be spent.

It expires, returns to the smart contract at the maturity date, and is burnt as the result of a frictionless, risk-free, and collateral-free NFT lending system. Additionally, if the loanee improves a piece of land or gives a character a lot more playtime, the original NFT might appreciate as a result of the loan.

The blockchain will be updated with these changes as a direct result of the wrapped NFT’s experience. Most NFT projects and protocols are moving in the direction of this methodology in the wake of the infamous Axie Infinity hack, which cost $600 million.

The rumor about large developers

Popular game producers will find it more difficult to avoid presenting some sort of product if current trends continue and the NFT lending sector experiences significant expansion over the following few years.

Ubisoft and Epic Games are already testing, and it’s feasible that NFTs may follow the same trajectory as the idea of cryptocurrencies in general, where everyone will eventually use elements of distributed ledger technology. The notion is that this will become too alluring for businesses to ignore, or they may employ private chains or something similar.

The play-to-earn buzz is not something that traditional gamers like, and they frequently have a point. The overall quality of the market is now relatively low, and players just play these games to earn cryptocurrency, so there isn’t much to get excited about. This has a detrimental effect because it was once hailed as the new paradigm.

The problem of people quitting a project because the value of the rewards has declined due to a token price fall is still there.

Some time may pass before those seeking a better future in NFT gaming. The profitability of large developers’ existing strategies won’t be simply abandoned in favor of a more decentralized NFT-based economy because doing so would undermine their economic model. However, seasoned creators may begin experimenting with already-existing in-game assets as NFTs, and they may profit greatly in this fashion.

Unless their bottom line is in danger or a highly lucrative opportunity arises, multibillion-dollar corporations often adapt slowly. Maybe both of these elements will be crucial in bringing about a change in how we handle digital assets.

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