Cent – which first hit the headlines last March when it sold Twitter founder Jack Dorsey’s first tweet for $2.9m – brought most of its operations to a close last week, after spotting a series of illegal activities.
These included people selling unauthorised copies of other NFTs and people making NFTs of content which is not theirs.
CEO and co-founder Cameron Hejazi told Reuters that there was “a spectrum of activity that is happening that basically shouldn’t be happening legally”
These issues were “rampant”, with users “minting counterfeit digital assets” he added.
According to Hejazi, Cent has tried to ban bad actors but compared the effort to a game of whack-a-mole. “Every time we would ban one, another one would come up, or three more would come up.”
NFTs are unique digital assets – an image, a video or text for instance – which exists on a blockchain (a decentralised online ledger) which can verify authenticity and ownership.
Anyone can create, or “mint”, an NFT, but ownership of the token does not usually confer ownership of the underlying item.
Cent has temporarily stopped allowing users to buy and sell most NFTs since 6 February, while it seeks a solution, with Hejazi adding that the firm might introduce centralized controls to facilitate a reopening of its marketplace.
Hejazi pointed out that the issue of fake and illegal content exists across the industry: “I think this is a pretty fundamental problem with Web3.”
His comments follow an admission made by NFT trading giant OpenSea last month that more than 80% of the tokens created through its free mining tool involved “plagiarized work, fake collections and spam”.
The admission was made by its support staff, following a flurry of enquiries as to why the trading site had started to limit the number of collections users could mint to five, and the number of pieces in each collection to fifty.
While web3 and the metaverse may be in their nascent stages, many brands are already experimenting with NFTs including Coca-Cola, Gap, and Walmart.
Alfa Romeo even announced last week that its Tonale SUV would be ‘the first car on the market’ to come with an NFT digital certificate, which, it claimed would increase its residual value.
The Italian car brand explained in its press release: “On the pre-owned car market, NFT certification represents an additional source of credibility for owners or dealers to count on. In the meantime, buyers will be reassured in their choice of a second-hand car.”
Such certification, however, may only prove ‘credible’ once NFT trading finds a solution to the plagiarism and dodgy trading practices that are endangering its growth.
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