The owner of Bored Apes NFT collection, Yuga Labs, recently purchased CryptoPunks and Meebits collections. However, the NFT whale has been under serious criticism of the crypto community on allegations of market manipulations.
Most of the ongoing discussion seems to be built around the visibly suspicious purchase of some Meebits NFTs before the deal was announced to be concluded. Reports have it that the said NFTs were almost double their value when the purchase deal became known to the public.
According to reports from PeckShield, a blockchain security company, up to 14 Ethereum wallet addresses that had no definite history of buying NFTs had purchased about 159 Meebits all between the 5th and 11th of March. This was shortly before Yuga Labs announced that it was going to buy the rights to CryptoPunks and Meebits from Larva Labs.
The contract made Yuga Labs effectively become the largest single entity in the NFT space, after having the rights to the two largest collections of NFTs available – CryptoPunks and Bored Ape Yacht Club. Both collections have a total worth of 1.4 million ETH which amounts to some $4.1 billion.
NFTs Take Over Traditional Gray Areas
The Bored Ape news and accusations have begun debates about if the Meebits deal can be called a form of insider trading or not, given the fact that NFTs are, for the name of it, not in any way securities. Although the Security and Exchange Commission has given signs of incorporating NFTs under its purview, there is no legislation in that regard just yet.
Though the processes surrounding the Meebits purchase were not at all illegal, it was called out by the community on various social media platforms for being unethical and irresponsible. A Twitter handle, @NFTethics, got the leading voice in the call out of Larva Lab’s employees because of the perceived market manipulation. But none of Larva or Yuga have since made an official statement over the issue.
Crypto is Not New to Market Manipulation
As it is that regulations in the crypto space are still being fleshed out on several fronts, the space has seen a lot of fraudulent activities. Such terms as “rug pull” and “pump and dump” are common-place languages in the crypto community because of the prevalence of the scams widespread in space. A lot of initial offers in coins are also potential breeding grounds for strong market manipulations since the issuers are in full control of the token supply.
There are a number of crypto regulations in the pipeline aimed at protecting investors from schemes like that. China completely banned crypto in 2021 because of the prevalence of scams like that.
Yuga Labs had faced allegations of attempting a pump and dump when it unveiled the ApeCoin token. Critics say that Yuga was going to hold most of the token supply while just some will be trading on the open market.
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