CryptoPunk 1563 transaction raises doubts
cryptopunk 1563 was sold this afternoon for 24,000 eth, or $56.3 million, in what appeared to be a large transaction. However, several visible and hidden red flags emerged, raising concerns about the legality of the sale.
Around $69,000 in eth was paid in September for the purchase of CryptoPunk 1563. This raises questions, as it is considered a “Floor Punk”, meaning it is usually sold near the collection's entry level price. Without rare attributes, there is no reason to justify such extensive analysis of on-chain data indicating that the transaction was a component of a quick loan program. The purchase was made using flash loans, which are unsecured crypto loans that must be repaid in a single transaction. The nft buyer borrowed $24,000 worth of eth from the DeFi Balancer protocol and returned it in a single transaction. Although the nft moved between wallets, no actual money changed hands because the provider repaid the loan. The buyer only paid the network fees.
This is not the first time that an application of this type of flash loans has occurred. Someone paid a staggering $532 million for a CryptoPunk in October 2021 using flash loans, only to return the money in the same transaction. While the event made headlines during the nft market boom, the sale was not recognized as legitimate by CryptoPunks creator Larva Labs or other nft data platforms.
Source: CryptoPunk
There is an unexpected twist in this case. According to network researcher 0xQuit, this latest flash loan could be linked to an upcoming meme coin called “Kamala Harris Punk.” The sale appears to be a stunt intended to generate pre-sale interest in the token. The nft in question will be sold to the highest bidder after a week-long pre-sale phase. The developer appears to be betting on earning more through the combined nft sale and token pre-sale than Punk's current price floor, which is around $63,400 in eth.
While the goal is to raise interest and capital through pre-sale, this strategy could backfire. If the stunt fails to generate enough attention or bidders, it could end up being an expensive gamble. The seller hopes to recover the amount raised in the pre-sale through the final CryptoPunk auction, but there are no guarantees.
Excluding today's questionable sale, CryptoPunks has generated around $16.7 million in trading volume over the past 30 days, according to data from CryptoSlam. The highest legitimate purchase of a CryptoPunk came in February 2022, when one sold for nearly $24 million in eth. That particular Punk was recently resold, although the exact amount is not revealed.
