A series of transactions on the NFT marketplace Blur has fascinated Crypto Twitter and sparked questions of legality after a prolific trader named Hanwe Chang tricked a competitor into buying certain Azuki NFTs at an inflated price.
“[I] noticed that someone’s bot was copying my bids on Blur, so I decided to trick him,” Chang said on Twitter, adding that he had made a profit of 800 Ethereum from the strategy, worth nearly $1.5 million.
A relative newcomer compared to NFT marketplaces like OpenSea and SuperRare, Blur shot ahead in terms of trading volume earlier this year due to gamified incentives that reward users with tokens based on trading related activities.
This includes rewards for users who bid on NFTs by property, a practice in which Chang has become well established, according to Blur’s leaderboards. Profile picture NFTs, including Azuki’s, often have unique traits that can affect their value based on rarity, such as eye color or clothing.
On Saturday, 12 Azuki NFTs sharing the specific background color “Off White A” were sold at the same time for 50 Ethereum worth $91,500 each. The previous Azuki NFT with an “Off White A” background sold for less than 5 Ethereum or about $9,000, making it a huge, eye-catching markup.
The 12 NFTs appear to have been collected in a digital wallet by Chang. Much of the profits from the transactions were then sent to a wallet labeled “hanwe.eth” using the Ethereum Name Service after they were completed, according to Ethernet.
Knowing there were bots copying his property bids, Chang likely tricked an unsuspecting trader into buying the Azuki NFTs at a higher price by placing a bid on his own NFTs, an account theorized by A Raving Ape on Twitter.
Context on how @HanweChang executed a plan to perfection and earned 800e by selling “Off White A – Background Color” azuki for 50e each and azuki elementals for 15e each.
This is an epic case of PvP in today’s NFT trading market ⚔️
Hanwe is rolling out in the top spot of… pic.twitter.com/M8Ujm8CquJ
— A-Raving-Ape.eth 🍌 (@a_raving_ape) August 5, 2023
A Raving Ape described the interaction as “an epic case of PvP” in the NFT market, citing the term “player versus player” associated with confrontations in multiplayer video games. But it seems that not everyone involved was entertained.
The bot’s apparent owner, “elizab.eth,” stepped forward on Twitter to claim that the “funds have been stolen form [their] bone.” Wanting to discuss the possibility of a bounty, the trader said Chang could keep 10% of the money if they agreed to return the rest.
Pseudonymous NFT influencer Dave III said Chang’s statement was not very sensible and warned others not to “brag about committing fraud”, calling his ploy “illegal market activity”.
These 2 crypto tweets are being put down as the dumbest of all time.
#1: Hanwe Admits ‘Bid Spoofing’ or ‘Shill Bidding’ – An Illegal Fraud Or Wire Fraud Market Activity
#2: Avi admits to market manipulation. He is now serving a prison sentence.
Don’t brag about committing fraud. pic.twitter.com/zgDJJr9nEX
— DAVE III (@dgoldzz) August 5, 2023
“Place bids you don’t want to be accepted just to trigger other bids is the illegal part,” Dave III clarified in a remark on a separate post.
While some commenters balked at the idea of impropriety, saying elizab.eth was simply outsmarted, Delphi Labs General Counsel Gabriel Shapiro seemed sympathetic.
“I think unironically [elizab.eth] could have good legal claims to get their ETH back from the bot’s ‘trick’ if they hire a skilled litigator,” he said on Twitter. However, Shapiro acknowledged that “legally, the issues are a bit more nuanced.”