Did Melania Trump just buy her own NFT? Mrs.Trump was the most recent celebrity to cash in on the NFT craze, releasing a collection titled ‘The Head of State Collection’. Since the announcement of her collection in December, she noted that they would be released at “regular intervals,” with the NFT in question being sold on January 23rd. The NFT was bought for 1,800 SOL, worth around $170,000 at the time. Although the transaction was not questioned at first, an article from Vice reported the series of transactions as everything on blockchain is made public. It turns out that the wallet address of the buyer was none other than the address that listed the collections in the first place. A blockchain detective zachbxt reported the transactions as follows:
If we visit Solscan.io (a Solana Blockchain Explorer) we see Melania Trump’s Head of State Collection, 2022 NFT was created on 01/11/2022 by 39ui using Metaplex.
01/23/2022 - 39ui sends 473,657.64 USDC to 3CTu.
01/25/2022 - 3CTu swaps 166,900 USDC for 1,816.08 SOL using Raydium (Solana decentralized exchange). A few minutes later 3CTu sends 1,799.5 SOL to 497Z.
01/26/2022 - 497Z makes a bid on the NFT for 1,800 SOL and wins the auction. Later that day the NFT creator 39ui claims the 1,800 SOL and sends it back to 3CTu.
01/29/2022 - 3CTu swaps 1,800 SOL for 168,313.24 USDC using Raydium.
As of 02/08/2022 all of the USDC sits in 3CTu’s account and the NFT in 497Z’s account.
In response, the office of Melania Trump made this statement: “The nature of Blockchain protocol is entirely transparent. Accordingly, the public can view each transaction on the Blockchain. The transaction was facilitated on behalf of a third-party buyer.” Yet they would not elaborate on the buyer and it remains unclear why they decided to conduct the sale this way. At the least this chain of events is unnatural - zachbxt elaborates by explaining, “Why was 3CTu [the middle man] needed? Why would [the auction winner] send the exact amount for a winning bid? Why was the money sent back to 3CTu? All my unanswered questions…”
The act of buying something this way, thereby artificially raising the price is called wash trading. Wash trading, while illegal in conventional securities and the sort, remains completely legal in an unregulated market. Let me leave you with a piece of thought: do we need to begin considering regulating the NFT market? If so, how do we deal with crypto which remains largely unregulated and the fact that one of its core selling points is that it can act as a hedge to the markets? Just things to consider as we move further into 2022 and both NFTs and cryptos keep ramping up in popularity.