In recent days, the crypto platform Rarible has been the subject of serious allegations regarding certain NFT auctions.
The Non-Fungible Token market has been going through a rough patch for months, and this could lead to operators in the sector looking for other sources of revenue.
Crypto News: Allegations Against NFT Marketplace Rarible
The specific issue concerns certain Unstoppable Domains auctions on Rarible.
A few days ago, an analysis by Match Systems was published on the auction of a lot (tokens.x) from Unstoppable Domains.
Match Systems discovered irregularities, namely non-compliance with the rules of the Rarible platform.
It also found that similar cases had occurred in the past, again in connection with Unstoppable Domains auctions, for the domains deposit.x and cruise.x.
So it seems clear that something is wrong, so much so that there is even public and verifiable evidence of it.
However, the worst accusations come from Jason Fernandes and Nadja Bester, co-founders of AdLunam.
Good to see @matthewegould, it was worth the 52 hours of no sleep so far. Great start, looking forward to much more being discovered
#keepcryptoclean #fixweb3@insider0x has already committed to being on @AdLunamInc’s #FutureofNFTs show to talk about the auction; would like to have…
— Nadja Bester (@NadjaBester) October 1, 2023
Fernandes and Bester explained the affair in a YouTube video, claiming that although they won a number of auctions to purchase certain domains, they were subsequently unable to take possession of the domains they purchased.
They also denounced other issues, such as the use of ‘bid foreclosure’ tactics, failure to complete auctions in a timely manner, and in particular the involvement of one particular user, Gaunter O’Dimm, in these activities.
Manipulation
The accusations mainly concern the alleged manipulation of the auctions.
Not only did they not receive notifications to properly participate in the auction, but they also accuse Rarible of not always awarding the auction to the highest bidder.
Rarible responded by saying it reserves the right not to sell a domain to the highest bidder.
These allegations call into question the regularity of Rarible’s auctions and the conduct of Unstoppable Domains.
Rarible’s response seems to confirm that the outcome of the auctions can be manipulated by them, and also seems to emphasize that the reasons behind the platform’s decisions are not always transparent.
It should be noted that Unstoppable Domains itself has since publicly criticized Rarible for alleged flaws in the mechanism by which it manages the auctions. In particular, an anomaly was cited where auctions did not close within the expected time, despite the absence of new bids.
So something is definitely wrong, and the blame seems to lie with Rarible. However, so far there appear to have been no complaints or clear evidence that crimes have been committed.
Rarible’s response
In response, Rarible co-founder Alex Salnikov agreed to speak on AdLunam’s podcast, The Future of NFTs, hosted by Bester himself, while Unstoppable CEO Matthew Gould declined.
In an upcoming episode of the AdLunamInc podcast, we’ll find out how Salnikov will justify this behavior, and whether he’ll admit that mistakes were made, or confirm that this is all part of company policy.
However, at this point, given the clear evidence and Rarible’s initial response to Nadja Bester, it is safe to assume that the management of Rarible’s auctions is far from transparent and in accordance with publicly established standards.
The problem is that there is currently reason to suspect that the auctions on Rarible are not real auctions and that someone is manipulating them from within to control the outcome.
However, the role of Unstoppable Domains and the user Gaunter O’Dimm is still unclear.
Rarible’s crypto and NFT ecosystem
The Rarible crypto platform enables the buying and selling of NFTs.
In addition to auction mode, it also allows easy P2P exchange and aggregation of tokens from other platforms.
It supports several blockchains including Ethereum, Polygon, Solana, Tezos and Immutable X.
It’s not much different from the others, except that it also collects NFTs for sale on other platforms, and has a rewards program that incentivizes collectors to participate in the ecosystem and contribute to the growth of the platform.
It also has its own token, RARI, which has been declining since October 8. While the price was around $0.90 before October 7, after jumping above $1 for a few hours, the price started to fall to $0.85.
The price started the year at $1.5 and peaked at over $2.3 in January.
The current price is 98% below the 2021 all-time high and in line with the 2020 launch price.
The NFT market
The historical data reported on Dappradar for Rarible shows a real collapse.
In 2021, daily peaks of over 4 million transactions and a trading volume of $2 million were reached.
Although the NFT market continued to grow into early 2022 and held up well until May of that year, Rarible’s collapse began as early as February 2022, with volumes falling below $50,000 per day.
The real collapse started in June this year, when the number of daily transactions fell below 400,000 and volumes also fell below $10,000.
More recently, daily transactions have also fallen below 300,000, with volumes remaining at their lowest levels.
Such a crisis certainly forces the company to take action pending the recovery of this market.
