Crypto entrepreneur Sina Estavi seeks to sell his prized first-ever tweet NFT for a whopping $48 million after purchasing it for nearly $2.9 million in the hopes of getting a dream-like return on his investment. Buyers were uninterested in the NFT, and it quickly lost its worth when the highest price at the auction was 280 dollars.
Sina Estavi wished he could sell the NFT for a 17000 percent increase in price so that he could donate half of the proceeds, $25 million, to charity. The good news is that you'd still get an 8500 percent profit, which is absurd considering that he didn't add any more value to an NFT that had no worth to begin with.
Estavi also has a criminal past. Following his controversial crypto project CryptoLand, which is a proposal to build a private island for only crypto geeks to live on and pursue their "crypto passion," he was detained in his native country of Iran last year and accused with "disrupting the economic system." Iranian authorities pushed Estavi to shut down the project.
"Estavi's arrest undoubtedly influenced the auction outcomes," argues Merav Ozair, a financial technology professor at Rutgers University and an NFT expert. "Some in the crypto community regard Estavi as a semi-criminal because he's now asking for money to reimburse CryptoLand's investors," Ozair explained.
What This Means For NFT Investors
Run as fast as you can and don’t look back. NFTs, along with meme coins with no fundamental value, are essentially a scam and investing in a scam is the worst thing you could do. In the real world, you can not add value to something without adding effort to justify that addition. In the NFT world, you can create value out of nowhere.
“There’s virtually nothing humans can’t turn into a market. But increasingly there are speculative bubbles in things with absolutely no fundamental value,” says John Hawkins, a professor at the Canberra School of Politics and an expert in finance. “NFTs have joined Bitcoin and celebrity meme-based cryptocurrencies such as Dogecoin and Shiba Inu as examples of tokens with no intrinsic worth, which speculators just buy in the hope the price will keep rising.”
What's more, guess what? It's nearly difficult for the price to keep increasing without luring new investors into the market by guaranteeing them that big investors will never perform a fast, smooth, and rapid rug pull.
Crypto Scams with a Rug Pull
Rug pulls are the most visible sort of crypto scam, and they occur when a content creator or a blockchain developer promotes for a new unique and cutting-edge crypto project, promising investors millions of dollars on little deposits. The majority of the time, it will be a brand new crypto currency that the founders are hoping to sell. They do, in fact.
When enough investors back the currency, the inventor initiates a procedure in which investors may purchase but not sell. Soon after, the developer pulls the rug out from under the project and takes all of the money the currency earned by converting it to cash, depleting the exchange's liquidity pool and bringing the token's value to $0.
An anonymous group of developers created the token SQUID in a recent crypto scam, claiming to be linked with the popular program Squid Game when they had no links to the show at all. The con artists managed to raise the value of the coin to $2,861 before yanking the rug out from under them and making off with an estimated $3.38 million.
Rug pull scams cost crypto investors over $2.8 billion last year, and if more individuals continue to enter the crypto business with the goal of generating quick money, this amount will only rise.
Personally, I have exited every crypto project in which I had invested, including well-known currencies like Bitcoin. My recommendation is to re-evaluate how much money you got from crypto investments and consider if you want to continue down that route.
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