Pepe the Frog creator Matt Furie decided to run an NFT auction, selling off an image of the controversial character in which it was waist-deep in a pool, its ass-crack peeping over the surface. Everything that has happened since is exactly how you would imagine such an auction in the insipid Web3 space would go down.
Pepe’s creator Matt Furie, who issued the bathing Pepe NFT, implied in his advertisement for the sale that the NFT would be the only one sold through Furie’s PegzDAO: “500 cards issued, 400 burned, 99 will remain in the PegzDAO, and ONE is being auctioned here.”
After Thayer bought the NFT, though, Furie allegedly gave away 46 identical cards for free. Now Thayer is suing Matt Furie and PegzDAO for “unfair, deceptive, untrue, and misleading advertising and wrongful actions.”
The lawsuit claims that shortly after Thayer paid $537,084 (150 ETH) for the “rare Pepe” and “unique asset,” Furie “released 46 of the 99 remaining Pepe NFTs, significantly devaluing Plaintiff’s Pepe NFT to less than $30,000.00, hundreds of thousands of dollars less than what he paid for this purportedly ‘unique asset.’ Upon information and belief, those 46 NFTs were given away for free.”
The value of his NFT dropped significantly due to the release of the aforementioned free additional “Pepe the Frog” NFTs, while he also accuses the creator and his organization of unlawful business practices. However, it has to be noted that buyers do not acquire the legal copyright of their NFT’s image.
In the end, this bizarre incident and legal conflict once again underlines the intangible value and sometimes inexplicable price of non-fungible tokens which can either be worth a fortune, or barely anything if they are not unique.
Ahead of the auction, the defendants allegedly advertised the Pepe the Frog NFT as “a piece of blockchain history, originally minted in 2016,” and explained that while 500 of this Pepe NFT were minted, 400 had been “burned,” “99 [would] remain in the PegzDAO,” a decentralized autonomous organization set up in order to “feature and sell Furie’s cryptoarto,” and thus, only one would actually be auctioned off.
The problem, according to Thayer, is that while the defendants advertised that only one of Furie’s Pepe NFTs would be auctioned, they failed to disclose that “they fully intended to distribute 46 identical NFTs for free almost immediately after the close of the October 2021 auction.”
“Relying on the defendants’ representations that only one Pepe NFT would be auctioned and the other existing 99 would remain in the PegzDAO ‘indefinitely,’” Thayer claims that he placed the winning bid for the Pepe NFT for 150 ETH ($537,084) on October 8, 2021. (According to the record of bids on the auction site, Thayer beat out another party that bid 140 ETH.)
Less than a month after the auction took place, however, he claims that the defendants released 46 of the 99 remaining Pepe NFTs – for free, thereby, “significantly devaluing [his] Pepe NFT to less than $30,000, [which is] hundreds of thousands of dollars less than what he paid for this purportedly ‘unique asset.’”