The battle for authenticity of the world’s most popular NFT collectibles heats up

In a Discord post on Wednesday, Matt Hall, lead developer at Larva Labs, the entity behind popular non-fungible token (NFT) collections CryptoPunks v2 and the original CryptoPunks v1, announced that he will be working on an The “CryptoPunks Art and Name” in the CryptoPunks V1 series allegedly infringes copyright. Typically, this amounts to sending a takedown notice under the Digital Millennium Copyright Act or the DMCA to the platform responsible for hosting the auctioned content.

In 2017, Larva Labs created the CryptoPunks v1 NFT collection with a fixed supply of 10,000 items. However, users soon discovered a potential vulnerability in the project’s smart contracts that allowed Punks buyers to withdraw their ether (ETH) after a purchase, leading to theft. Larva Labs quickly dismissed the collection as unreal and released CryptoPunks v2, again with a fixed supply of 10,000 images. This change comes after the initial collection of 10,000 CryptoPunks V1 sold out, so a total of 20,000 CryptoPunks exist, of which the authenticity of 10,000 is disputed.Also, Larva Labs can’t just sabotage the v1 project as Twitter user @0xStroudonian tip Smart contracts v1 and v2 are intertwined because they point to the same file.

Since OpenSea previously banned the sale of CryptoPunks v1, the issue remains unnoticed even if users wrap it as an ERC-721 token to fix a potential vulnerability. However, a recent listing on LooksRare prompted OpenSea to review the ban. At press time, the CryptoPunks v1 series has a total volume of 12,069 ETH ($34.1 million) on OpenSea, while the CryptoPunks v2 series has a total volume of 819,900 ETH ($2.22 billion) on the same platform.

Blockchain enthusiasts are still heavily divided over the authenticity of the v1 and v2 CryptoPunk series. For example, Discord user Rufus Xavier#9449 wrote:

“Larva Labs, you need to fix this… DMCA is not the way. Now you’re doing this with your collection post-trade? You’re making the whole space look bad. Stop.”

Meanwhile, Discord user mb#1510 expressed a different opinion:

“I just don’t know if I can sell V2 to someone who knows there is another token that may or may not be related to them.”

In copyright law, the presence of counterfeit and diluted products can significantly affect consumer trust in the original brand and may lead to a decrease in its value. Since the supply of CryptoPunks was supposed to be “fixed” at 10,000 pieces, adding another 10,000 pieces to the collection, acknowledging its legitimacy, resulted in brand dilution and possibly a drop in collectible value. However, there is no legal precedent as to whether the unbundling, resurfacing and remarketing of NFT art collections due to smart contract vulnerabilities constitute copyright infringement.

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