NFT collector Brandon Riley recently experienced a devastating loss when he accidentally burned a CryptoPunk NFT worth $135,372.16 (77 ETH). Riley burned the valuable NFT during an attempt to borrow money against it. The incident underscores the challenges faced by the NFT market and CryptoPunk collectors alike.
Riley added CryptoPunk #685 to his collection on March 13, intending to hold the highly coveted NFT for the long term. Aware of the potential benefits of acquiring new NFTs ahead of a crypto bull market, the seasoned investor opted to borrow money against his CryptoPunk. To do this, Riley employed the popular wrapping technique.
Accidental Burning of the CryptoPunk NFT
However, Riley’s unfamiliarity with the wrapping process led to a costly mistake. In following the directions meticulously, he accidentally sent the asset to a burn address, resulting in the permanent deletion of the NFT from circulation.
Riley expressed his regret, stating, “I just shouldn’t have attempted this on my own, I guess.” Contrary to assumptions made by Crypto Twitter users, he revealed that he had purchased CryptoPunk #685 with borrowed funds, further emphasizing the impact of his error.
The incident sparked a broader discussion on Crypto Twitter, with many users attributing the loss to confusing user interfaces and complex instructions within the crypto ecosystem. The community reached a consensus on the need for improved front-end processes to avoid similar mishaps in the future.
Riley said, “I was told to follow the directions exactly, so I did,” explained Riley, but in the process, he ended up losing 77 ETH, which was worth $135,372.16. He explained:
“I was not wrapping this punk to sell it on Blur. It was to be my “forever punk.” The number is exact reverse of my ape. I was only wrapping it because I needed to borrow some liquidity from it.”
The Return of the Lost CryptoPunk
In the latest turn of events, the lost CryptoPunk has been given new life through its resurrection as a Bitcoin blockchain ordinal. This move showcases the adaptability of blockchain technology, as well as the dedication of the community to preserve the value and significance of such a coveted NFT.
Wash Trading in the NFT Market
This event coincides with a significant increase in NFT wash trading. According to a CoinGecko report, wash trading in the NFT market surged by 126% in February. The top six NFT marketplaces—Magic Eden, OpenSea, Blur, X2Y2, CryptoPunks, and LooksRare—contributed to this growth. Specifically, X2Y2, Blur, and LooksRare experienced a rise in wash trading for the fourth consecutive month, totaling a volume of $580 million.
The accidental burning of the CryptoPunk NFT highlights the need for the industry to address ongoing challenges. By simplifying processes, enhancing user education, and promoting transparency, the NFT market can create a more secure environment for CryptoPunk collectors and all NFT enthusiasts.