CryptoPunk Sold at a Fraction of Value Due to Platform Closure

Valued around 600 ETH or $1.5 million, CryptoPunk #2386 was just sold for merely 10 ETH, or roughly $23,000. The sale highlighted the immutable nature of blockchain technology. A smart contract, originally linked to a now-defunct website, allowed the NFT to be sold for less. The underpriced deal happened following the site closure, after CryptoPunk had been locked up for some time.

Punk 2386, with a current high bid of 600 eth, sold for 10 ETH today.

A combination of clever sleuthing, followed by an unfortunate miscalculation leads to a 7 figure payday for 0x282.

🧵 pic.twitter.com/E29DLQZ0GT

— Quit (@0xQuit) September 11, 2024

CryptoPunk #2386’s Unique Appeal

CryptoPunk #2386 belongs to the Ethereum-based NFT collection CryptoPunk. Among the whole collection, only 24 show an ape, hence it is quite sought after on the NFT market. Another comparable ape-themed CryptoPunk lately sold for around $1.5 million. During the NFT frenzy, these uncommon NFTs were much sought for. Some were fractionalized to enable partial ownership by several investors. By distributing ownership into smaller shares, fractionalization enabled many people to possess a portion of a valuable NFT, hence increasing accessibility of these assets.

But the situation with CryptoPunk #2386 shows the danger involved with such fractional ownership when the trade platform under management closes. Whereas its ownership was split into 10,000 ERC-20 tokens, the NFT had been locked in escrow on the Ethereum network.

14-Day NFT Buyout

Using Niftex, a tool allowing NFT segmentation, CryptoPunk #2386 was fractionalized. The NFT stayed locked in escrow when the platform closed, leaving 257 holders with the split shares. The closing of the Niftex platform made trading these fractional shares challenging, therefore rendering the NFT essentially stranded.

Still, an unidentified person saw a chance as the smart contract controlling the fractional ownership still ran on the blockchain. They turned on a “shotgun” function on August 28, allowing any stakeholder to suggest a buyout at a designated price. Should there be no counter offers within 14 days, they might buy the whole NFT.