NFT Collector Accidentally Burns $135k CryptoPunk NFT
Brandon Riley, a collector of non-fungible tokens (NFTs) from the CryptoPunks collection, accidentally sent a CryptoPunk NFT worth 77 ETH to a burn address, permanently deleting the NFT from circulation.
He intended to borrow some money against it to buy another NFT.
The unfortunate mistake
Riley added CryptoPunk #685 to his collection on March 13, paying 77 ETH. As a seasoned investor, he wanted to hold it for the long term and decided to borrow some money against it using a technique known as wrapping.
— Brandon Riley (@vitalitygrowth) March 19, 2023
However, while going through the unfamiliar process of wrapping NFTs, Riley accidentally sent the asset to a burn address, permanently deleting the NFT from circulation.
The collector was devastated as he lost 77 ETH, worth around $135,372.16 at the time. Riley explained that he was not wrapping the punk to sell it on Blur but rather because he needed to borrow some liquidity from it. He further stated that he had purchased CryptoPunk #685 through borrowed money, contradicting rumors that he had “deep pockets.”
Crypto Twitter users sympathized with Riley and blamed confusing user interfaces and complex instructions for the investor’s loss. Many agreed that the front-end processes for crypto ecosystems needed to be revamped to prevent such mistakes from happening in the future.
Riley himself said that he shouldn’t have attempted the wrapping process on his own and has learned from the experience.
I did do the first part with my own address I’m step 2. But then when I got to step 5 the burn address was the one listed under “9. proxyInfo” and I was told to follow the directions exactly, so I did. I just shouldn’t have attempted this on my own I guess.
— Brandon Riley (@vitalitygrowth) March 24, 2023
NFT wash trading on the rise
A CoinGecko report confirmed that NFT wash trading increased by 126% in February. The top six NFT marketplaces are Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks, and LooksRare. X2Y2, Blur, and LooksRare saw a rise in wash trading for the fourth straight month, with a total volume of $580 million.
With the rise of NFTs and their increasing popularity, the industry must ensure that investors are adequately equipped to handle these digital assets. Riley’s experience serves as a reminder to investors to exercise caution when handling NFTs and to seek assistance when attempting new techniques. It also highlights the need for more user-friendly interfaces and instructions to prevent such mistakes from happening in the future.