![Over 300 NFTs From Three Arrows Capital’s NFT Fund Moved by Liquidator to New Wallet Over 300 NFTs From Three Arrows Capital’s NFT Fund Moved by Liquidator to New Wallet](https://static.news.bitcoin.com/wp-content/uploads/2022/10/shutterstock_1952321191-768x432.jpg)
The firm planned to market NFTs “in a manner akin to a campaign hat or souvenirs,” intending to have political committees offer them to high-volume low-dollar donors.
The legal team behind nonfungible token firm DataVault Holdings has requested an advisory opinion from the United States Federal Election Commission on using NFTs for fundraising efforts.
In a Sept. 21 letter to FEC acting general counsel Lisa Stevenson, DataVault’s lawyers proposed sending NFTs as “souvenirs” to individuals who contributed to political committees, as well as giving the token holder the option to use it for promoting a campaign “strictly on a volunteer basis and without any compensation.” The NFT firm requested the FEC provide guidance on how it may operate as a commercial vendor — issuing the tokens to political committee members seemingly without violating federal campaign finance laws.
“DataVault’s activities to political committees will be conducted on a strictly commercial basis and DataVault will not seek to influence, affirmatively or negatively, the nomination or election of any candidate to Federal office,” said DataVault’s counsel Elliot Berke. “DataVault would provide the NFTs to political committees in the same manner and normal course of business as other non-political committee clients.”
According to DataVault’s proposals, the firm planned to market NFTs “in a manner akin to a campaign hat or souvenirs,” intending to have political committees offer them to high-volume low-dollar donors. The tokens could be used for VIP access at different campaign events, or contain artwork or literature related to a candidate’s policies. Any fees from issuing NFTs or transactions would be reported as a “fundraising expenditure,” according to DataVault's example scenario:
“An NFT is priced at $10.00 and is provided by DataVault to a campaign committee. The NFT is offered by the campaign committee to contributors who make a $10.00 contribution. Once the campaign committee collects a contribution connected with the NFT, it records the $10.00 contribution and pays DataVault a fee of $3.00 as a usual and normal fundraising expenditure.”
DataVault’s legal team requested the FEC provide clarification on whether the firm could “design and market NFTs to political committees” as well as provide the tokens to incentivize contributors. In a 2019 advisory opinion on NFTs, the commission determined tokens were “materially indistinguishable from traditional forms of campaign souvenirs” such as buttons.
“The distribution of valueless blockchain tokens is not a form of compensation for volunteers' services but rather a novel means for volunteers and supporters to show their support for the campaign,” said the FEC at the time. “The Commission found the valueless tokens to be analogous to more traditional forms of campaign souvenirs, and concluded that nothing in the Act or Commission regulations would limit or prohibit their distribution.”
Related: Crypto and decentralization could influence voters in 2022 US midterm elections: Report
Political figures outside the FEC's purview have taken similar initiatives. Prior to South Korea’s presidential election in March, Democratic Party candidate Lee Jae-myung’s campaign said it would issue NFTs showing images of the politician and his campaign pledges to those who donated money, in an effort to appeal to the younger generation. In California, NFTs were at the center of a discussion among members of the state’s Fair Political Practices Commission in March, later leading to the independent body reversing a 2018 ban on crypto donations for candidates for state and local offices.
Other users in the crypto Twitter Community believe lax security management is to blame for the latest phishing scam aimed at Beeple's fans and followers.
Non fungible token (NFT) artist Mike "Beeple" Winkelmann has found himself the target of phishing scammers yet again, warning users that the URL link to his official Discord server was “hacked” — sending unaware new members to a wallet draining Discord channel if they follow the link.
In an Oct. 3 post, the NFT artist warned users not to go into the "fraudulent" Discord channel and verify as it will “drain your wallet.”
it appears our discord URLs were hacked to point to a fraudulent discord. DO NOT go into that discord and do not verify, it will drain your wallet!!
— beeple (@beeple) October 3, 2022
once again massive thanks again to discord for being garbage.
However, Beeple wasn’t the first to notice the URL slight-of-hand, with Twitter user maxnaut.eth noting in a post hours earlier that the Discord link connected to the Beeple: Everydays - 2020 Collection on NFT marketplace OpenSea marketplace may have been “hijacked.”
The screenshot shared by maxnaut.eth suggests that the URL points to a “CollabLand wallet drainer,” showing a Collab.Land Bot on Discord which directs members to verify account ownership — instead it works to drain their wallets, noting:
"Your Discord URL probably got hijacked and your team didn't update it on OS. You need to change that ASAP or people going to get rekd."
While Beeple claims the URLs were hacked and that Discord is to blame, other crypto Twitter community members are arguing that lax security measures are truly to blame.
NFT analyst and blockchain detective "OKHotshot" replied to the artist's announcement, stating the URLs were not hacked but instead alleging: "Mismanagement of discord URLs allows this happen, probably just like it happened to CryptoBatz."
While cybersecurity firm Black Alchemy Solutions Group commented their belief that it was not "a Discord problem."
"This is a problem with a mismanagement of the Beeple Information Security apparatus. If you haven't already, hire a vCISO (Security Officer), web3 doesn't = Natively Secure."
It appears that the misdirecting Discord URLs have been fixed by the artist, according to maxnaut.eth, noting that it “Seems Beep Man picked it up and has fixed it now."
At the time of writing, the Discord link in the affected Opensea listing also appears to be gone.
Related: 8 sneaky crypto scams on Twitter right now
Beeple's social media and messaging platforms appear to be a popular target for scammers and hackers, having sold some of the most expensive NFTs on record, including the First 5,000 Days, a compilation of 5000 pieces of artwork that sold for $69.3 million.
Elon Musk's spacecraft manufacturer Space X, tech giant Apple, luxury brand Louis Vuitton and other high-profile companies and individuals are all listed as clients on Beeple's website.
In May, a phishing scam netted $438,000 in crypto and NFTs through a hijacking of his Twitter account, linking to a raffle purporting to be related to a Louis Vuitton NFT collaboration.
In Nov. 2021, his Discord was part of another scam, where an admin account was compromised and a fake NFT drop was advertised, netting the scammers an estimated 38 Ether (ETH) worth roughly $176,378.14 at the time.
Beeple did not disclose how many users may have been impacted by the current malicious Discord links.
Cointelegraph has reached out to Beeple but has not received an immediate response at the time of publication.
According to Fumio Kishida, the government of Japan's investment in digital transformation included issuing NFTs to local authorities using digital solutions.
Fumio Kishida, the prime minister of Japan since 2021, has said the government will be making efforts to promote Web3 services, including those dealing with nonfungible tokens, or NFTs, and the Metaverse.
In an Oct. 3 speech before Japan’s National Diet, Kishida said the government’s investment in the country’s digital transformation already included issuing NFTs to local authorities using digital technology to solve challenges in their respective jurisdictions. He also hinted at digitizing national identity cards. In addition, the prime minister said the cabinet would “promote efforts to expand the use of Web 3.0 services that utilize the metaverse and NFTs.”
Kishida said Japan’s technological investments would extend to developing and producing semiconductors as part of a joint effort with the United States and work on reform regulations related to the technology sector. The current prime minister, who took office in October 2021, followed former Prime Minister Yoshihide Suga, who suggested he was in favor of taxing Bitcoin (BTC) transactions in Japan.
Related: Japan’s crypto self-regulation ‘experiment’ not working
During Kishida’s time in office, crypto users in Japan have seen a number of developments in the space, from Mt. Gox moving forward on repayment procedures after years of legal delays to the reintroduction of crypto ATMs in the country. In August, two of the country’s crypto advocacy groups, the Japan Crypto-Asset Business Association and the Japan Crypto-Asset Exchange Association, called for a 20% separate tax on crypto earnings for individual investors — many currently face a crypto tax rate of up to 55%.
NFTs in the metaverse should generally be considered securities, but developers have been slow to recognize that fact. Expect a regulatory reckoning to come swiftly for Axie Infinity, Bored Apes, and other projects that have thrown caution to the wind.
The metaverse is a futuristic iteration of the internet, featuring a digital economy and an immersive virtual environment alongside other interactive features. This relatively nascent space has gained so much traction in recent years that conservative estimates suggest that by 2024, its total valuation could top $800 billion. Meta (the parent body behind Facebook and Instagram), Google, Microsoft, Nvidia, Nike and others have made Fortune-100-sized metaverse splashes.
But with great valuations comes great scrutiny from increasingly tech-savvy financial regulators. Unlike traditional tech products, which often spend years putting growth over revenue, some metaverse projects push questionable monetization schemes on their users prior to launching a live experience. Metaverse real estate is a prime example of this practice, with platforms like Big Time games selling land in their metaverse before opening up access to the game.
Typically, the United States Securities and Exchange Commission doesn’t step in unless retail investors face predatory courting of their dollars without full disclosure of what they are investing in. The line for what classifies as a security is often blurry — but in the case of the metaverse, the practice of land sales should generally be considered a security under U.S. law.
GameFi platforms like Axie Infinity demonstrate the speed at which metaverse projects can birth multi-billion-dollar economies. Their sheer scale necessitates internal controls and monetary policies similar to multinational banks or even small countries. They should be required to staff compliance officers who coordinate with government regulators and even conduct Know Your Customer for large transactions.
The metaverse is intrinsically linked with financialization. While no bodily harm can be inflicted in the metaverse (yet), a lot of financial harm has already been caused. The company behind the Bored Apes Yacht Club nonfungible tokens (NFTs) saw a hack this year after a community manager’s Discord was compromised. Hackers walked away with NFTs worth 200 Ether (ETH).
A swath of Wall Street banks was recently fined $1.8 billion for using “banned” messaging apps. Metaverse projects like Yuga Labs should face similar proactive fines for not implementing secure monetary and technical controls.
Related: Throw your Bored Apes in the trash
A key first step for any metaverse project will be to classify what type of asset(s) they are issuing. For example, is it a security? A utility token? Or something else? This might seem like a daunting task, but the groundwork has already been laid by the initial coin offering era in 2017, and further efforts should be undertaken by regulators and protocols to provide clarity and protect consumers.
After the classification process is complete, the next step will be to develop a regulatory framework that can be applied to the metaverse. This will likely include rules and regulations around things like securities offerings, Anti-Money Laundering and consumer protection.
It’s crucial to strike the right balance. Too much regulation could stifle innovation and adoption, but too little could lead to widespread abuse. It will be up to policymakers to work with founders to find that sweet spot.
Despite concerns, the metaverse brings together a suite of emerging technologies: virtual reality (VR), augmented reality (AR) and NFTs. They all come together to drive the space forward with increasing momentum in the near-to-mid term.
Cybercriminals are continually discovering new tactics to exploit users of the metaverse — i.e., through hacking schemes or identity theft. Because AR and VR wearables associated with these ecosystems generate massive volumes of personal data — including biometric info from eye-tracking and body-tracking technology — the metaverse is a tantalizing playground for bad actors.
Outside of financial theft, privacy concerns abound as three-dimensional data sets will reveal increasingly sensitive personal information. The General Data Protection Regulation in Europe and the California Consumer Protection Act are comprehensive pieces of privacy legislation that have forced tech platforms to hire data protection officers and data privacy compliance officers. Metaverse platforms will need to fill similar roles and could face even greater regulatory scrutiny, given the sensitivity of the data they might collect.
Related: Biden’s anemic crypto framework offered nothing new
As the demand for the metaverse continues to spike, so will the need for better internet services since the former requires a lot of bandwidth (estimated to be several orders of magnitude from internet traffic levels today). As a result, it is quite possible that many telecom networks and their existing data dissemination infrastructures may become overloaded.
One way to solve this issue is by investing in 5G technology and building out a stronger infrastructure. But this takes time, money and resources. The other solution is to develop more efficient data compression algorithms that can help reduce the amount of bandwidth required to transmit data within the metaverse.
Lastly, aside from all the technical risks, an aspect of the metaverse to consider is the negative impact it can potentially have on one’s mental health. Since the ecosystem is unencumbered by criminal law, there can be no path of recourse when users are faced with online abuse (such as racism).
Because any network operator, firm or business, on paper, can exist outside of a proposed regulatory framework if they chose to do so — any given country’s efforts at regulation will have limited impact.
This is perfectly illustrated by the fact that many of the social media platforms we use today, including Twitter and Facebook, are not based in the U.S., but instead, operate from countries like Ireland and Singapore, where data protection laws are much more relaxed.
Related: Crypto gaming sucks — But devs can fix it
The same logic applies to the metaverse. Even if a country were to pass a law attempting to regulate this space, it is doubtful that all businesses would agree to abide by it.
Therefore, unless every participant of the metaverse aligns and agrees with the vision of setting up a uniform code of governance, there is no way of stopping a third-party entity (such as an offshore investment firm) from creating its own unregulated pocket within the metaverse, which users of other digital ecosystems can then access without any apparent restrictions.
The metaverse is all set to reshape our lives whether we like it or not. Ultimately, the “move fast and break things” ethos of technology development is alive and well, and history has shown that founders move much faster than regulators can keep up with. But it will be crucial for regulators to step up and take proactive steps to allow for innovation to flourish without causing catastrophic financial damage to retail investors. After all, the choices we make today will determine how this technology will shape our tomorrow.
Huy Nguyen is the co-founder of KardiaChain, Southeast Asia’s first interoperable blockchain infrastructure. Since May 2022, he has served as the vice president of the Vietnam Blockchain Association, the official government body to push for mass adoption in Vietnam. He previously served as a senior tech lead manager at Google and holds more than 10 years of experience building large-scale distributed infrastructures, including the Google Access Wireless Platform and Google Fiber Network Infrastructure.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
300 holders of the Spartan NFT will be able to spread their ashes at a 35-foot memorial to Spartan soldiers, to be built in Greece.
The company behind the Spartan Race has released a nonfungible token (NFT) collection which will immortalize the names of the initial holders in stone, with plans to build a 35-foot (10.5 meters) statue in Ancient Sparta encircled with 15,000 name-engraved stones.
Spartan founder and CEO Joe De Sena plans to bury his ashes under his stone at the site dubbed the Spartan 300 Memorial, which will pay homage to the ancient Battle of Thermopylae in which 300 Spartans were said to have fought and were killed.
Of the 15,000 NFTs, 300 will be “Super Rare,” with holders of that NFT type given the option of spreading their ashes over the memorial after their death, which could see it become one of the first NFTcollections to grant someone a final resting place.
Owners can sell their NFT on markets such as OpenSea, but it’s unclear if this burial perk is transferred to the new owner.
The passes sell for $3,000 and also permit holders up to nine years of unlimited access to all Spartan brand events, including its 70-hour long Death Race and its Tough Mudder obstacle race, as well as with exclusive merch drops.
NFT holders will also be granted access to an exclusive yearly event in which they can train with pro athletes along with testing the fitness brands’ products and obstacles.
Solana-based NFT game Star Atlas launched its first playable pre-alpha on Sept. 29 through the Epic Games store for owners of its NFTs, allowing them to view in-game vehicles they’ve purchased within the games’ environment.
Star Atlas is an open-world space exploration strategy game set in the year 2620 in which players can buy and sell NFTs representative of vehicles such as spaceships, players also mine for resources to sell on the in-game marketplace and join political factions.
The Showroom pre-alpha demo is powered by the Unreal Engine 5, a 3D creation tool released in April by Epic Games, and is used in its flagship game Fortnite.
The Star Atlas developers have also launched an open source tool, The Foundation Software Development Kit (F-KIT), which allows Unreal Engine 5 developers to more easily integrate their titles into the Solana blockchain.
Stuffed animal retailer Build-A-Bear Workshop is entering Web3, partnering with NFT marketplace Sweet to launch its first NFT collection in celebration of its 25th year in business.
The NFTs will be minted on the Polygon blockchain and will begin with the October auction of a physical and digital bundle which includes a unique physical teddy bear studded with Swarovski crystals along with its NFT counterpart.
A second November auction will offer five silver teddy bear NFTs also accompanied by matching physical counterparts before a December launch of 5,000 NFTs are made available for public mint.
A rare CryptoPunk has sold on NFT marketplace OpenSea for 3,300 Ether (ETH), worth over $4.4 million, to an anonymous buyer on Sept. 28 marking the fourth-highest sale in terms of ETH spent, according to data from DappRadar.
Related: NFT trading volume plunges 98% from January despite rise in adoption
CryptoPunk #2924 features rare attributes such as being an “ape” type, of which only 24 exist in the 10,000-strong collection. It also has one “accessory” — a hoodie which is a rarity in the collection, and more so as it is the only “ape” to feature one.
The most expensive CryptoPunk ever sold was purchased for 124,457 ETH, worth over $530 million at the time of purchase in Oct. 2021
Warner Music Group announced a partnership with NFT marketplace OpenSea to allow select artists to launch NFT collections on customizable and dedicated landing pages to build their Web3 presence.
Facebook and Instagram users in 100 countries can connect their crypto wallets to post and share NFTs across both platforms with parent company Meta supporting digital assets from the Ethereum, Polygon and Flow blockchains.