NFT Investor Accidentally Burns $135K CryptoPunk Trying To Borrow Money
A nonfungible token (NFT) from the CryptoPunks collection worth 77 Ether (ETH) was sent to a burn address to be permanently destroyed. However, the collector intended to borrow some money against it to buy another NFT.
NFT collector Brandon Riley added CryptoPunk #685 to his collection on March 13th by paying 77 ETH, hoping to keep it for the long term.
Now feels like an appropriate time to introduce #BAYC 586 more #Punk 685 (acquired a week ago). Hope to keep both for a decade…LGF! pic.twitter.com/SLb68rY6MR
— Brandon Riley (@vitalitygrowth) March 19, 2023
As a seasoned investor, Riley knew the importance of acquiring new NFTs just before the crypto markets took off into another bull market. As a result, he decided to borrow money against CryptoPunk #685 using a popular technique known as wrapping.
I did the first part with my own address, I’m step 2. But when I got to step 5, the burn address was the one listed under “9. proxyInfo” and I was told to follow the instructions exactly, so I did. I just shouldn’t have tried this on my own.
— Brandon Riley (@vitalitygrowth) March 24, 2023
While going through the unknown process of wrapping NFTs, Riley accidentally sent the asset to a burn address – which permanently deleted the NFT from circulation, as shown below.
“I was told to follow the instructions exactly, so I did,” Riley explained, but in the process he ended up losing 77 ETH, which was worth $135,372.16. He explained:
“I didn’t package this punk to sell it on Blur. It was supposed to be my “forever punk”. The number is the exact opposite of my monkeys. I just packed it because I needed to borrow some liquidity from it.”
While members of Crypto Twitter opined that the NFT collector must have had “deep pockets”, Riley contradicted the rumors by revealing that he had purchased CryptoPunk #685 through borrowed money.
“I just shouldn’t have tried this on my own, I guess,” was Riley’s takeaway from the experience. On the other hand, Crypto Twitter also blamed confusing user interface and complex instructions for the investor’s loss. As a result, the community unanimously agreed on the need to revamp the front-end processes of crypto ecosystems.
Related: Improving Bitcoin NFT marketplace infrastructure sets the stage for ecosystem growth
NFT wash trading increased by 126% in February, a CoinGecko report confirmed. The top six NFT marketplaces are Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks and LooksRare. X2Y2, Blur and LooksRare saw an increase in laundry trade for the fourth month in a row, with a total volume of $580 million.
As Cointelegraph previously reported, the issue of wash trading stems from a lack of clear rules.
Blade: 4 out of 10 NFT sales are fake: Learn to spot the signs of a wash trade
