Prolific Trader’s NFT Scheme Raises Legal Questions & Captivates Crypto Twitter
A recent series of transactions on the NFT marketplace Blur has caught the attention of the crypto community and sparked discussions about legality. The scheme involves a well-known trader named Hanwe Chang, who managed to deceive a competitor and make a substantial profit by inflating the price of certain Azuki NFTs.
Chang, who goes by the username Hanwe, revealed on Twitter that he noticed a bot copying his bids on Blur. In response, he decided to trick the bot and ended up profiting around 800 Ethereum, equivalent to nearly $1.5 million. The tactics he employed have raised concerns about the legality of his actions.
Blur is a relatively new player in the NFT marketplace compared to giants like OpenSea and SuperRare. Its trading volume surged earlier this year due to gamified incentives that reward users with tokens based on their trade-related activities. One such activity is bidding on NFTs based on specific traits, a practice in which Chang has become particularly skilled, as evidenced by his high ranking on Blur’s leaderboards.
The particular incident that captivated the crypto world occurred when 12 Azuki NFTs with the background color Off White A were sold for an inflated price of 50 Ethereum each, amounting to $91,500. In contrast, the previous sale of an Azuki NFT with the same background color had fetched less than 5 Ethereum, roughly $9,000. The sudden massive markup attracted attention and raised eyebrows.
Investigating the transactions, it appears that Chang managed to accumulate all 12 NFTs in a digital wallet. Once the trades were completed, a significant portion of the profits was transferred to a wallet associated with the label hanwe.eth using the Ethereum Name Service, according to Ethercan.
Analysts believe that Chang, aware of bots copying his trait-based bids, likely duped an unwitting trader into purchasing the Azuki NFTs at an inflated price by placing bids on his own NFTs. This theory was proposed by a Twitter user named A Raving Ape, who described the situation as an epic case of PvP in the NFT market, drawing parallels to player-versus-player interactions in video games. However, not everyone found the situation entertaining.
The owner of the bot, with the username elizab.eth, came forward on Twitter, claiming that their funds were stolen by Chang’s trickery. They expressed a willingness to resolve the issue through a bounty arrangement, offering Chang 10% of the funds if the rest were returned. The incident led to a divided response from the crypto community.
While some individuals argued that elizab.eth was merely outsmarted and should accept the consequences, others, including the pseudonymous NFT influencer Dave III, criticized Chang for admitting to fraudulent activities. They cautioned against bragging about market manipulation and stated that such behavior is illegal.
Amidst the differing opinions, Gabriel Shapiro, the General Counsel of Delphi Labs, expressed sympathy for elizab.eth, suggesting that they might have legal grounds to recover their ETH with the assistance of a skilled litigator. However, Shapiro also acknowledged the nuanced legal nature of the situation.
The captivating story involving Hanwe Chang’s NFT scheme has brought attention to the legal and ethical boundaries within the rapidly expanding world of NFT trading. As the crypto community continues to grapple with these issues, it serves as a reminder that transparency, fairness, and integrity are essential for the healthy development of this emerging market.
