Platform suspends most NFT sales for counterfeiting and plagiarism

The platform that sold an NFT of Jack Dorsey’s first tweet for $2.9 million stopped most transactions because some people were selling content tokens that didn’t belong to them, its founder said, calling it a “fundamental problem” in the rapidly growing digital asset market.

Sales of NFTs, an acronym for “non-fungible tokens”, soared to around $25 billion in 2021, leaving many people baffled. Why is so much money being spent on things that don’t physically exist and that anyone can view online for free?

NFTs are cryptoassets that record ownership of a digital file, such as an image, video, or text. Anyone can create, or “coin”, an NFT, and ownership of the token generally does not confer ownership of the underlying item.

Reports of scams and forgery became common.

US-based Cent ran one of the first known NFT sales of $1 million when it sold the former Twitter CEO’s post as an NFT last March. But as of February 6, it stopped allowing buying and selling, its CEO and co-founder Cameron Hejazi told Reuters.

“There’s a spectrum of activity that’s happening that basically shouldn’t be happening — let’s say, legally,” said Hejazi.

While Cent’s marketplace “beta.cent.co” has stopped selling NFTs, the specific part for selling Tweet NFTs, which is called “Valuables”, is still active.

Hejazi highlighted three main problems: people who sell unauthorized copies of other NFTs, people who make NFTs of content they don’t own, and people who sell bundles of NFTs that resemble financial securities.

He said these problems are “rampant”, with users “non-stop minting counterfeit digital assets”.

“It kept happening. We canceled infringing accounts, but it was like playing a game of mole hunting… Every time we pushed one away, another popped up, or three more.”

“Money Chasing Money”

These issues may gain greater focus as big brands join the race towards the so-called “metaverse”, or Web3. Coca-Cola and luxury brand Gucci are among the companies that have sold NFTs, while YouTube has said it will explore the NFT’s capabilities.

While Cent, with 150,000 users and revenue “in the millions,” is a relatively small NFT platform, Hejazi said the issue of false and illegal content exists across the industry.

“I think it’s a very fundamental problem with Web3,” he said.

The largest NFT market, OpenSea, valued at $13.3 billion after its latest venture funding round, said last month that more than 80% of NFTs minted for free on its platform were “plagiarized works, fake collections and spam”.

OpenSea tried to limit the number of NFTs a user could mint for free, but later reversed that decision after a backlash from users, the company said in a Twitter thread, adding that it is “working on various solutions” to prevent “bad actors”. ” while supporting the creators.

“It is against our policy to sell NFTs using plagiarized content,” said an OpenSea spokesperson.
“We are working 24/7 to ship products, add features and refine our processes to meet the moment.”

For many NFT enthusiasts, the decentralized nature of blockchain technology is appealing, allowing users to create and trade digital assets without a central authority controlling the activity.

But Hejazi said his company is interested in protecting content creators and may adopt centralized controls as a short-term measure to reopen the market, before exploring decentralized solutions.

It was after the sale of Dorsey’s NFT that Cent started to get an idea of ​​what was going on in the NFT markets.

“We realize a lot of this is just money chasing money.”

Translated by Luiz Roberto M. Gonçalves