On Monday, Azuki, an Anime-themed NFT collection of avatars, was at 23 ETH, ($58,558). Now it sits at a floor of 8 ETH, a 68% fall.
The cause? A strange confession from its founder that revealed how he used fake identities to promote past NFT collections, and rake in a cool $3M in profits on his way to the exit. Zagabond, laid out his boastful testimonial about his rug pulling ways in a blog post.
Over a span of two months, Zagabond created CryptoPhunks, Tendies, and Zunk — and quickly abandoned them after cashing in. He describes his tactics as “learnings” that helped him create Azuki.
For each project, Zagabond used separate identities ranging from a fictional intern known as @philiptheintern for CryptoPhunks, to a female developer named @0xMandy for CryptoZunks. He claims that these identities were crucial to building the product’s stories. The collections’ branding and art tested the border between homage and appropriation.
“Ownership by the community creates a once-in-a-lifetime window to redefine culture, storytelling, and the future of media,” wrote Zagabond, who has not revealed his true identity.
Marketing can be a slippery proposition, especially in the pseudonymous world of crypto. And Zagabond isn’t the first founder to use smoke and mirrors to imbue his collections with mystique.
Yet someone should have probably told Zagabond that a community or company founder does not typically bolt right after raising money for a project. Coming amid the implosion of the Terra ecosystem, the crypto world is angry and frustrated.
Interest is Misaligned
“I would say people need to understand founder incentives, especially legal incentives. Azuki had no oversight and no ties it had to consider,” NFT collector chief_leek told The Defiant. “When there is only 1 entity involved with controlling interest, especially when that interest is misaligned with the general public, that can be dangerous.”
On May 10, Zagabond tweeted a restitution plan. He said his venture would hand over control of contracts to the communities of previous projects, and figure out the right setup for an “equitable redistribution of funds.”
In a mea culpa after speaking with collectors on a Twitter Spaces session yesterday, Vagabond professed ignorance.
“I realized my shortcomings in how I handled the prior projects which I started,” he tweeted. “To the communities I walked away from, to Azuki holders, and to those who believed in me — I’m truly sorry.”