An incident involving non-fungible token (NFT) trading on the Blur marketplace has ignited debate about the legality of certain tactics. The well-known NFT trader Hanwe Chang admitted to placing inflated bids to deceive another user’s trading bot that was mirroring his activity. Through this strategy, Mr. Chang profited approximately 800 Ethereum, totaling near $1.5 million. He brazenly discussed the ploy on Twitter. This has prompted questions regarding the ethicality and lawfulness of such bot-manipulating schemes in NFT markets.
Blur is a relatively new NFT platform that gained popularity this year by rewarding users for trading behaviors like bidding on NFTs based on specific attributes. Mr. Chang had become known for such attribute-based bids. NFTs like Azuki derive value from rare traits. Recently, 12 Azuki NFTs with an identical rare background were sold by Mr. Chang for 50 Ethereum each, about $91,500, despite the previous sale price for that trait being under 5 Ethereum. Mr. Chang appears to have first gathered the 12 NFTs before making the lucrative sales.
A Raving Ape theorized that Mr. Chang deliberately bid on his own items to dupe another trader’s bot into purchasing the Azuki NFTs at inflated prices. While some argue this was just shrewd trading, the alleged bot owner claimed the funds were “stolen.” Influencer Dave III admonished bragging about “committing fraud” and characterized the behavior as illicit manipulation.
Legal expert Gabriel Shapiro suggested the bot owner may have grounds to retrieve their lost Ethereum if Mr. Chang’s bids were placed deceptively, though he noted the law is intricate. While perspectives differ, deceptive bot-exploiting tactics raise concerns.
