The CEO of US-based NFT marketplace Cent shut the platform down on February 6, due to people selling fake and illegal content.
“There’s a spectrum of activity that is happening that basically shouldn’t be happening – like, legally,” CEO and co-founder Cameron Hejazi told Reuters on Saturday. He stated that, according to findings, the marketplace was flooded with plagiarism and “rampant” fakes, with people either selling unauthorized copies of other NFTs, making NFTs of content which does not belong to them, or selling sets of NFTs which resemble a security.
“[They were] minting and minting and minting counterfeit digital assets,” he said. The term ‘mint’ refers to the creation of NFTs (non-fungible tokens), which are crypto assets in the form of digital files such as images, videos, music records, or texts. Anyone with internet access can mint an NFT, while the ownership of the token may not be tied to the ownership of the item the token is based on.
“It kept happening. We would ban offending accounts but it was like we’re playing a game of whack-a-mole… Every time we would ban one, another one would come up, or three more would come up,” Hejazi said.
Cent is a relatively small NFT marketplace with 150,000 users and revenue “in the millions,” but notable for hosting one of the first publicly known million-dollar NFT sales when it sold former Twitter CEO Jack Dorsey’s first tweet as an NFT last March.
Hejazi said Cent may re-open after the owners explore measures to protect content creators. These may even include the launch of centralized controls as a short-term measure.
According to the CEO, the problem of counterfeit NFTs is gaining momentum across the entire digital data sector.
“I think this is a pretty fundamental problem… We realized that a lot of it is just money chasing money,” he said.
OpenSea, the largest NFT marketplace with $13.3 billion valuation, revealed last month that over 80% of the NFTs minted on the platform for free were “plagiarized works, fake collections and spam.”
The unauthorized use of digital data by NFT creators has already led to a number of lawsuits. Earlier this month, Nike sued an online reseller that made profits on the unauthorized sale of NFTs of their sneakers.
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