On Thursday night, a CryptoPunk with wild hair and black lipstick, traits that aren’t particularly rare as far as the pixelated NFT characters go, sold for an eye-popping half a billion dollars—in crypto, of course.
A Twitter bot that tracks CryptoPunk sales announced the news shortly before 8 p.m. E.S.T., sending crypto Twitter abuzz and making people wonder what the heck just happened. Was this massive money laundering, or what?
If this were a real art sale, it would have made CryptoPunk 9998 the most expensive NFT ever, far surpassing Punk 7523, which sold for $11.8 million in June, and leaving the Beeple NFT that sold for $69 million in March in the dust.
But this wasn’t a real art sale. It wasn’t money laundering or an exploit either. It was simply crypto traders trading as they do. The owner of Punk 9998 was having a little fun with crypto derivatives. In other words, the transaction was a prank.
Even Larva Labs, the creator of the pixelated alien creatures, crossed out the sale, meaning it doesn’t actually count.
So what exactly happened? For starters, the seller and the buyer in this translation are one and the same. In traditional finance, this is known as a wash trade—a type of illegal market manipulation meant to make an item appear more valuable than it actually is.
Second, the funds for the wash trade came via a “flash loan.” If you’re not familiar what a flash loan is—and why would you be?—it is a type of…