NFT: accusations against the Rarible crypto platform

Over the past few days, the crypto platform Rarible has been the subject of serious accusations regarding certain NFT auctions.

The Non-Fungible Token market has been going through a difficult period for months now, and this could lead to operators in the sector looking for other borderline sources of revenue.

Summary

• Crypto news: allegations against NFT marketplace Rarible
• Manipulation
• Rarible’s response
• Rarible’s crypto and NFT ecosystem
• The NFT market

Crypto news: allegations against NFT marketplace Rarible

The specific problem concerns certain auctions run by Unstoppable Domains on Rarible.

A few days ago, an analysis by Match Systems was published on the auction of a lot (tokens.x) from Unstoppable Domains.

Match Systems discovered irregularities, namely non-compliance with the rules of the Rarible platform.

It also discovered that similar cases had already occurred in the past, again in connection with Unstoppable Domains auctions, for the domains deposit.x and cruise.x.

So it seems obvious that something is wrong, so much so that there is even public and verifiable evidence of it.

The worst accusations, however, come from Jason Fernandes and Nadja Bester, co-founders of AdLunam.

Good to see @matthewegould, was worth the 52 hours of no sleep thus far. Great start, looking forward to much more being uncovered 🔥 #keepcryptoclean #fixweb3@insider0x has already agreed to be on @AdLunamInc’s show #FutureofNFTs to talk about the auction; would love to have…

— Nadja Bester (@NadjaBester) October 1, 2023

Fernandes and Bester explained the affair in a YouTube video, claiming that although they had won a number of auctions to buy certain domains, they were then prevented from taking possession of the domains they had bought.

They also denounced other problems, such as the use of ‘bid shielding’ tactics, failure to complete auctions in a timely manner, and in particular the involvement of a particular user, Gaunter O’Dimm, in these activities.

Manipulation

The allegations relate in particular to the alleged manipulation of the auctions.

Not only did they not receive notifications in order to properly participate in the auction, but they also accuse Rarible of not always awarding the auction to the highest bidder.

Rarible responded by saying that it reserves the right not to sell a domain to the highest bidder.

These allegations call into question the regularity of Rarible’s auctions and the behaviour of Unstoppable Domains.

Rarible’s response seems to confirm that the outcome of the auctions can be manipulated by them, and also seems to highlight that the reasons behind the platform’s decisions are not always transparent.

It should be noted that Unstoppable Domains itself has since publicly criticised Rarible for alleged flaws in the mechanism by which it manages the auctions. In particular, it cited an anomaly where auctions did not close in the expected time despite the absence of new bids.

So something’s definitely wrong, and the blame seems to lie with Rarible. So far, however, there appear to have been no complaints or clear evidence that any crimes have been committed.

Rarible’s response

In response, Rarible co-founder Alex Salnikov agreed to speak on AdLunam’s podcast, The Future of NFTs, hosted by Bester himself, while Unstoppable CEO Matthew Gould declined.

In an upcoming episode of the AdLunamInc podcast, we will find out how Salnikov will justify this behaviour, and whether he will admit that mistakes were made, or confirm that this is all part of company policy.

For now, however, given some clear evidence and Rarible’s initial response to Nadja Bester, it is safe to assume that the management of auctions on Rarible is far from transparent and in line with publicly stated standards.

The problem is that at this point there is reason to suspect that the auctions on Rarible are not real auctions and that someone is manipulating them from the inside to control the outcome.

However, the role of Unstoppable Domains and the user Gaunter O’Dimm is still unclear.

Rarible’s crypto and NFT ecosystem

The Rarible crypto platform enables the buying and selling of NFTs.

In addition to auction mode, it also allows for easy P2P exchange and aggregation of tokens from other platforms.

It supports several blockchains, including Ethereum, Polygon, Solana, Tezos and Immutable X.

It is not very different from the others, except that it also aggregates NFTs offered for sale on other platforms, and has a rewards programme that incentivises collectors to participate in the ecosystem and contribute to the growth of the platform.

It also has its own token, RARI, which has been falling since 8 October. While its price was around $0.90 prior to 7 October, after jumping above $1 for a few hours, it began a decline to $0.85.

It started the year at $1.5 and peaked at over $2.3 in January.

The current price is 98% below the 2021 all-time high and in line with the 2020 launch price.

The NFT market

The historical data reported on Dappradar for Rarible shows a real collapse.

In 2021, daily peaks of over 4 million transactions and $2 million in trading volume were reached.

However, while the NFT market continued to grow until the beginning of 2022 and held up well until May of that year, the collapse of Rarible began as early as February 2022, with volumes dropping below $50,000 per day.

The real collapse began in June this year, with daily transactions falling below 400,000 and volumes also dropping below $10,000.

More recently, daily transactions have also fallen below 300,000, with volumes remaining at their lowest levels.

Such a crisis is certainly forcing the company to take action while waiting for this market to recover.

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