One of the fastest NFT collections to reach “blue chip” status, Azuki, seems to be falling from grace after its pseudonymous co-founder Zagabond revealed his previous involvement with three failed projects.
Azuki’s price floor has tumbled on new information surrounding the project founder’s history in the NFT space.
Zagabond, the pseudonymous founder of Azuki, sent the popular NFT collection’s community into turmoil yesterday night after revealing his fraught history in the space in a Mirror post titled “A Builder’s Journey.” In it, he shared his story and the lessons learned through experimenting with different projects in the NFT space. “During these formative times, it’s important that the community encourages creators to innovate and experiment,” he said, adding that each experiment came with “key learnings” to which much of Azuki’s success could be attributed.
Zagabond discussed his past failures in the space, but the approach quickly backfired. Their admission of involvement with CryptoPhunks, Tendies, and CryptoZunks—three NFT projects that Zagabond had founded and then abandoned after they failed to get traction—caused the price floor of the Azuki NFT collection to tumble by almost 50% in Ethereum terms before recouping some of its losses. According to flips.finance data, Azuki’s floor price dropped from roughly 20 Ethereum to around 11.1 Ethereum on the revelation, before rebounding to the current floor price of about 16.1 Ethereum.
“Intrigued by the brilliance of CryptoPunks,” one of the most valuable NFT collections in the space, Zagabond said that he created CryptoPhunks as an experiment that introduced an “interactive story product” and “challenged the community to think about Web3 copyright rules.” CryptoPhunks was subsequently hit with a DMCA takedown request by CryptoPunks creator Larva Labs, at which point, Zagabond said, he decided to hand over the project to the community. However, this claim has been disputed by some members of the NFT community.
One user going by the pseudonym huck pointed to on-chain data that allegedly shows the CryptoPhunks creator executing a “wash trade” on the NFT marketplace LooksRare for a profit of 300 Ethereum after increasing the creator royalty rate to 5%. Wash trading is a form of market manipulation in which someone simultaneously buys and sells a financial instrument to artificially inflate its price. It’s illegal in traditional markets.
Another NFT enthusiast known as 2070 accused the Azuki founder of “rugging” or abruptly abandoning his second project, Tendies. “Despite our best efforts, the project had gone as far as it could, with only 15% of the collection minted,” Zagabond said of Tendies in the blog post, adding that the team “did everything we could to gain traction for the project.” However, 2070, who participated in the Tendies mint, claims that the project ceased all activity post-launch, deleted all social media, and closed the Discord channel within a month of the mint.
Zagabond also admitted to his involvement in CryptoZunks, where he allegedly engaged in questionable antics to promote the NFTs. Ahead of its launch, Zagabond posed as a woman, likely in an attempt to attract more attention to the project. According to several screenshots shared by NFT community members on Twitter, Zagabond went under the name “Amanda” and used a female CryptoZunk profile picture on Twitter.
Zagabond denied the rug pull accusations many community members levelled at him, arguing that his past three projects were failed experiments rather than outright scams. “Do I wish they were more successful? Of course. There was no product-market fit at the end of the day, but that doesn’t mean it’s a rug,” he said.
The Azuki collection is currently trading around 28% down in Ethereum terms on the day, and roughly 50% down from its all-time high floor price of 33.7 Ethereum recorded on Apr. 2. Additionally, the price drop is even more significant in U.S. dollar terms as Ethereum’s market value has dropped from around $3,500 to just over $2,400 at press time.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
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