Tech

Record-breaking sale of Beeple's NFT artwork seems shady AF

The buyer is selling fractional ownership of the artwork to the public through the sale of a new B20 token. Beeple owns two percent of that token.

MEXICO CITY, MEXICO - MARCH 16, 2021: A person looks a paint during a tour inside at Munal Museum, amid orange alert of Covid-19, while  it has been allowed resumption museums. The National Art Museum applies sanitary measures in its reopening to the public by presenting the permanent exhibitions: The 20th Century in the 21st, Mural Collection; works by muralists Dr. Atl, Maria Izquierdo, Rufino Tamayo, Jos Clemente Orozco, Diego Rivero and David Alfaro Siqueiros, among many others. On March 16, 2021 in Mexico City, Mexico. (Photo credit should read Luis Barron  / Eyepix Group/Barcroft Media via Getty Images)
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Following the record-breaking sale of a piece of digital artwork for more than $69 million, new information has come to light suggesting the sale was part of a get-rich-quick scheme with direct involvement from Beeple, an artist who has specialized in digital work since at least 2007.

In a blog post, independent reporter Amy Castor reports that the buyer of the Beeple piece — a .JPG file titled “Everydays: The First 5000 Days” — is Vignesh Sundaresan, an entrepreneur who has operated various cryptocurrency ventures over the years. Before creating a network of global Bitcoin ATMs, Sundaresan was the sole founder of Coins-e, an early cryptocurrency exchange that reportedly stole multiple customers’ cryptocurrency holdings.

Sundaresan has since come out and confirmed that he bought the Beeple artwork, but also denied involvement in fraud at Coins-e, saying that he sold the site to a different company. Castor was unable to prove the acquiring company actually exists, and today Coins-e no longer does, which doesn’t exactly do much to clear up the matter.

Conflict of interest — Where things get interesting with the Beeple purchase is that Sundaresan is selling fractional ownership of the work through a new entity called Metapurse, a crypto-based investment firm that has rolled up several Beeple pieces into a bundle.

Anyone can purchase a small ownership stake in the art collection by purchasing the company’s B20 token. The hope would be that the works become more valuable over time — individuals are essentially buying into an index fund of sorts. But when Sundaresan created B20, he gave himself 59 percent of the outstanding tokens, and Beeple himself received two percent. That would suggest that Beeple and Sundaresan were in cahoots to add the “5000 Days” piece to the Metapurse collection, as doing so would drive up the price of the fledgling B20 token and make them both money.

The first B20 tokens went on sale on January 23, when 1.6 million tokens were sold to the public at a price of $0.36 each. After the auction of the Beeple piece closed at $69 million, the price shot up to $23. According to Castor, Beeple’s tokens were worth roughly $3 million on March 14, and that’s on top of what he received from the sale of the art itself. Sundaresan for his part effectively made his millions back on the purchase, though B20 has fallen to $9 per token since.

Rich get richer — Participants in the burgeoning market for NFTs — essentially ownership certificates for digital art that imbue them with demonstrable scarcity — have criticized the headline sales of art from major artists, saying it only reinforces the wealth of millionaires. The hope for NFTs is that the technology could create a sustainable stream of income for smaller artists, who have a hard time monetizing their work.

NFTs offer some unique features, like the ability for artists to receive perpetual royalties each time their work is sold and resold, meaning that they continue to earn an income if their pieces become more valuable over time. But these types of shady sales by millionaires trying to get even richer risk undermining NFTs and giving them a bad reputation.

The existing art world is notorious for being opaque, with little regulation that encourages money laundering and tax evasion schemes. With cryptocurrencies being so loosely regulated, it’s not at all surprising that we’re seeing the same behavior make its way to the digital art world.