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Cent halts NFT sales amid concerns over plagiarism, fraud

By Andrew Knoll


Updated

NFT logo
Cent halts its NFT sales over plagiarism, fraud concerns - Photo: Cent
 

Cent, the platform that sold Twitter founder Jack Dorsey’s first Tweet in NFT form for nearly $3m last year, has suspended most of its transactions due to serious legitimacy issues, including counterfeit items, plagiarised content and wash trading.

In an interview with Reuters, Cent CEO and founder Cameron Hejazi said “There's a spectrum of activity that is happening that basically shouldn't be happening – like, legally.”

Hijazi listed three chief concerns: the sale of unauthorised copies of NFTs, the sale of NFTs that resemble or represent a security, and the sale of plagiarised content as an NFT.

After dealing with users in violation of policies on an individual basis, only to see more malfeasant actors appear in their place – a process he compared to the “whack-a-mole” arcade game – Hejazi was forced to suspend most activity on Feb. 6. Users can still sell NFTs of Tweets at this time.

A 'fundamental problem'

NFTs accounted for around $25bn in 2021 within the rapidly growing digital asset market, according to decentralised finance market tracker DappRadar. While most sales are relatively nickel-dime compared to, for example, Dorsey’s, others have been much larger, including one NFT that sold for more than $69m.

Entities like Coca-Cola, Fanatics and Gucci as well as prominent individuals from Dorsey to American football player Tom Brady have jumped on the NFT train. Yet other observers have been perplexed by their rise in popularity. On one internet forum, a user flippantly compared the ownership of an NFT to that of the marriage certificate of a person whose spouse was cheating on them with everyone in their town.

In the interview with Reuters, Hejazi acknowledged that the problems plaguing his platform were not unique to it, and rather were “fundamental” to the market at this point in time. He also said that (Cent) realised that "a lot of it is just money chasing money," and that centralised controls might be temporarily implemented to stem rampant transgressions.

Elsewhere in the market

Recent events corroborated Hejazi’s account and perspective, but also offered limited prospects for meaningful correction.

OpenSea, the largest marketplace for NFTs, recently limited the number of NFTs users could mint to 50. The measure was met swiftly with backlash and rescinded in short order; however, of greater importance was the rationale that OpenSea offered for having implemented it in the first place.

“We've recently seen misuse of this feature increase exponentially,” OpenSea tweeted on its official, confirmed account. “Over 80% of the items created with this tool were plagiarised works, fake collections, and spam.”

Like Cent, they are now seeking methods to discourage impropriety.

In addition to reversing the decision, we’re working through a number of solutions to ensure we support our creators while deterring bad actors,” OpenSea tweeted.

 

 

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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