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A Bunch of Ape NFTs Just Sold For $24.4 Million (theverge.com) 87

Posted by msmash from the how-about-that dept.
If you thought NFT mania was about to die off, think again: a bundle of 101 NFTs from Bored Ape Yacht Club just sold at Sotheby's for $24.4 million. A second bundle of 101 Bored Ape Kennel Club NFTs sold for $1.8 million. From a report: That puts the ape sale among the biggest in the NFT space. A bundle of nine CryptoPunks -- one of the earliest NFT projects -- sold for $16.9 million in May. And Beeple sold a collage of his works as an NFT for $69 million in March. While it's hard to directly compare all of these sales (there are 101 items in today's auctions versus one in Beeple's), the purchases show that the appetite for NFT art isn't dying down, and they suggest that buyers think there'll be high resale value as the market continues to grow.
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A Bunch of Ape NFTs Just Sold For $24.4 Million More

A Bunch of Ape NFTs Just Sold For $24.4 Million

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  • I could buy my own soiled undies from myself for $1B and then announce to the world that they are therefore worth $1B because they sold for $1B at Sotheby's. I just can't help but think that there MUST be some sort of shenanigans going on with these NFTs....

    • Thatâ(TM)s not how it works, you have to convince at least two wealthy people to keep trying to one up each other for it. So you basically have to get two billionaires to really want the item badly.

      • Well if Andy Warhol can put pictures of cambels soup cans up and hang it in the MOMA in NY, then anything is fucking possible. Can we make an NFT of his damn soup cans?

        • Well if Andy Warhol can put pictures of cambels soup cans up and hang it in the MOMA in NY, then anything is fucking possible. Can we make an NFT of his damn soup cans?

          I saw a print or copy of Warhols cans at the local art museum, I can say I liked it better than I do the soup.

      • Actually that’s exactly how it works

    • Re:Who bought them? (Score:4, Insightful)

      by ceoyoyo ( 59147 ) on Thursday September 09, 2021 @06:35PM (#61780825)

      Welcome to the world of expensive art. You've got step 1 and 2 down. Shenanigans start with step 3:

      3. donate soiled undies to a museum or other charitable organization that can issue you a tax receipt for market value ($1B).

      As a bonus:

      4. some sucker might actually pay real money for your *other* pieces.

    • Salespeople who can sell snow to a snowman.

    • I need to get in on this. Maybe try to sell an NFT for $1M that consists of JPEGs of my morning deuce.

  • Once again this is a tax Dodge (Score:5, Insightful)

    by rsilvergun ( 571051 ) on Thursday September 09, 2021 @04:46PM (#61780515)
    If you Google for tax Dodges in high art you can find the scam. It's not actually that complicated. If you're wealthy your tax rate is about 50% when you get to the upper echelons of your income (remember that wealthy people pay the same rate as you and me on the lower end of their income because we have a progressive tax system). So the way the scam works you buy some art for $100,000 or a million dollars or whatever and because you bought it there's now a market and so it's now worth a lot more money. You then donate the art to a non-profit and claim a tax write off.

    So buy a painting for a million, it's suddenly worth 10 million, you donated and write that off on your taxes for the 10 million it's worth, and then you claim a 50% deduction that works out to 5 million in your pocket. If you ever wondered why modern art is so terrible and nonsensical that's why. It's because the people buying it don't care what it looks like.
    • If you claim it's worth $10 million, you damn well better be prepared to prove why it's worth that to the tax auditors.

      • Re:Once again this is a tax Dodge (Score:4, Insightful)

        by ITRambo ( 1467509 ) on Thursday September 09, 2021 @05:02PM (#61780569)
        I don't think it works like that. If someone paid ten million bucks and can prove it, the auditors have to accept it as an expense. If it was paid using real money, there is no question of the cost, just of the intelligence of the buyer. Value doesn't matter as the rich live in their own reality bubble.
        • I think youre both right. I think you have to auction it off for charity and it raise 10million in the auction. Then your donation is worth 10mil instead of 1 mil.

        • Re: (Score:1)

          by Anonymous Coward
          It actually does matter a lot, rsilvergun has got it partly right but mostly wrong. You can't just donate to any non profit, it has to be very very specific non -profits where that piece of art would be part of the non - profits mission and you absolutely will need proof for the IRS. You can't just buy any piece of shit for an inflated price and donate to any non profit, if you do that you only get to make a deduction on the purchase price not the market value. So in the end this is really restricted to ver

        • I don't think it works like that. If someone paid ten million bucks and can prove it, the auditors have to accept it as an expense. If it was paid using real money, there is no question of the cost, just of the intelligence of the buyer. Value doesn't matter as the rich live in their own reality bubble.

          If you paid ten million bucks, the auditors can go straight to the seller and check whether he paid taxes for his profits. If they can't find the seller or something dodgy is going on so no taxes were paid for the profits, then they'll come back to you.

          And you need to prove it was actually paid.

      • We don't have tax auditors (Score:5, Insightful)

        by rsilvergun ( 571051 ) on Thursday September 09, 2021 @05:36PM (#61780643)
        the IRS was gutted in the Bush era (and Trump didn't do it any favors). They've been complaining about their inability to enforce tax law for ages. Nobody listens.

        Ironically when they do audit anyone it's a regular middle class person because there are statutory requirements that they do a certain number of audits on low and middle income earners that were baked into old laws by Republicans as part of a compromise by Democrats to get the laws through.

        • Re: (Score:2, Insightful)

          by ebonum ( 830686 )

          The IRS has 75,000 employees ( https://en.wikipedia.org/wiki/... [wikipedia.org] ). That is a crazy large number of employees. If they can't do their job with 75k people, adding another 75k people isn't going to change anything.

          • it's just hard for human beings to grasp numbers over about 120. You're talking about an organization that overseas the finances of every single American company and individual in the world.

            To add some perspective, Bank of America has 213,000 and they're just one bank in America.

          • Re:We don't have tax auditors (Score:4, Informative)

            by ToasterMonkey ( 467067 ) on Thursday September 09, 2021 @07:57PM (#61781019) Homepage

            The IRS has 75,000 employees ( https://en.wikipedia.org/wiki/... [wikipedia.org] ). That is a crazy large number of employees. If they can't do their job with 75k people, adding another 75k people isn't going to change anything.

            https://www.irs.gov/statistics... [irs.gov]

            They process 240 million forms and documents, and $3.5 trillion in gross taxes a year. What is an appropriate head count for that scale of operation?

            Type of return or form 2020
            United States, total [1] 240,160,843
            Income taxes, total 189,562,923
            C or other corporation [2] 1,819,301
            S corporation, Form 1120–S 5,044,303
            Partnership, Form 1065 4,470,095
            Individual, total [3] 157,195,302
            Forms 1040, 1040–A, 1040–EZ, 1040–SR 156,580,123
            Forms 1040–C, 1040–NR, 1040NR–EZ, 1040–PR, 1040–SS 615,179
            Individual estimated tax, Form 1040–ES 17,579,898
            Estate and trust, Form 1041 2,820,317
            Estate and trust estimated tax, Form 1041–ES 633,707
            Employment taxes [4] 28,028,002
            Estate tax [5] 15,023
            Gift tax, Form 709 158,095
            Excise taxes [6] 902,342
            Tax-exempt organizations [7] 1,360,719
            Supplemental documents [8] 20,133,739

          • That's roughly one employee per 5,000 American citizens. Even if every one of those 75,000 employees is doing audits year-round, you'd probably get at most 1% of people being audited.

          • Pffft, the USA has 330 million people and the IRS has just 75,000 staff?

            Australia has nearly 26 million population and the ATO has around 20,000 staff.

            Hmm, those ratios of tax staff per taxpayer seem ... rather different!

            Maybe it's due to the focus that the two countries have on people in them actually paying tax?

        • Re: (Score:2)

          by cusco ( 717999 )

          Actually that was Newt Gingrich in the Clinton years. He realized that he didn't have to eliminate the EPA, FAA, IRS, etc. if he could just make their enforcement budget a line item, and then squeeze. This is the exact same reason why we ended up with the Boeing 737MAX fiasco, the FAA regulatory budget was cut so much that they no longer have staff who can examine an aircraft and say, "These are too many alterations, this plane needs to be recertified." All they can do is take the manufacturer's word for

      • Re: (Score:2)

        by ceoyoyo ( 59147 )

        That's why you first sell some work from the same artist in an auction to some rich buddies (or yourself) to establish fair market value.

    • Re: (Score:2)

      by quenda ( 644621 )

      So buy a painting for a million, it's suddenly worth 10 million, you donated and write that off on your taxes for the 10 million it's worth, and then you claim a 50% deduction that works out to 5 million in your pocket.

      What about capital gains tax? Are you saying they make the $9m profit tax-free?
      Googling, I see the US capital gains tax is only 20%, so still a good scam if they pay that.

      • Re: (Score:2)

        by tap ( 18562 )

        You don't have to pay capital gains tax on donations. If you never realized the gain and donate the asset, then you get to deduct the asset's current value and escape taxes on the unrealized gains.

        • Re: (Score:2)

          by quenda ( 644621 )

          You don't have to pay capital gains tax on donations. If you never realized the gain and donate the asset, then you get to deduct the asset's current value and escape taxes on the unrealized gains.

          Sure, but that requires deducting twice, from income as well as gains. Such a crazy claim requires rigorous citations, which will prove to be mis-read.
          Shifting income to capital gains is a good scam, but it does not vanish completely.

          • Re:Once again this is a tax Dodge (Score:5, Informative)

            by gravewax ( 4772409 ) on Friday September 10, 2021 @01:30AM (#61781435)
            there is nothing to cite. It is a common misunderstanding of taxation that many conspriacy theorists have. You don't get to deduct market values when you give away an art asset unless it is to very specific non-profits where the donation is specifically related to their mission (e.g. donating a picasso to a fine art museum) and in those circumstances it needs to be independently appraised. You only get to deduct the cost basis which is the purchase price, unrealised gains are not deductible except for that one specific scenario mentioned. You can't create your own charity and donate, you can't give a fine art piece to some church and get the deduction on market value etc etc.
    • So they're planning on donating these to a... NFT museum? Um, no. The NFTs in this collection are trading like crazy. This is real speculation believe it or not.

    • Re: (Score:2)

      by dasunt ( 249686 )

      So the way the scam works you buy some art for $100,000 or a million dollars or whatever and because you bought it there's now a market and so it's now worth a lot more money. You then donate the art to a non-profit and claim a tax write off.

      How does this work? I buy art for $1 million, it's then suddenly valued at $10 million, so I donate it to a charity, and then can avoid paying $3.37 million in taxes (37% short term capital gains) or $2 million (long term capital gains)?

      While if I sold the art, I c

      • Because no-one would actually pay the 10 mil for it.
        The "market value" is anything but.

        • Re: (Score:2)

          by dasunt ( 249686 )
          If nobody would pay ten mill, shouldn't the IRS have an easy case to prove the tax write-off isn't real?

  • NFT (Score:4, Insightful)

    by achacha ( 139424 ) on Thursday September 09, 2021 @04:48PM (#61780519) Homepage

    Money laundering, alive and well...

  • This is who is buying these (Score:5, Insightful)

    by SmaryJerry ( 2759091 ) on Thursday September 09, 2021 @04:48PM (#61780521)
    Art has long been the best way to transfer money between parties who want to hide a trail of a different transaction or favor. Here’s how it works. Someone provides drugs worth $10M. You then instead of paying them for drugs, that would be illegal, buy a piece of art from them for $10M. Since art is subjective, no one can quantify the value. Sure you have to pay taxes on it but the money is clean. This is called money laundering. The second type of people buying these are the sellers themselves. They have hundreds of wallets and make offers from all of the wallets they already own, hoping to create a false auction to drive the prices very high The third type of person is the person who was scammed by the seller into thinking there is demand by seeing hundreds of bids coming in of crazy amounts. Then, seeing the price go up and up, eventually decide to make a purchase as an investment, when all of a sudden they win the bid. Problem is they can’t resell their jpeg for even a small fraction of what it was bought for, unless they happen to get lucky that another person was tricked by the originally sellers into thinking these items are high demand as well.
    • All of your assumptions are wrong. NFTs transactions leave a trail on the blockchain just like any other crypto transaction.

      • Actually, I didn't see any assumption by the port you replied to as to whether or not the transactions are anonymous. They don't need to be. You deliver drugs to me, I buy an NFT picture of your dog, who cares if the transaction is on a blockchain for everyone to see? Nothing illegal in me buying a picture of your dog.

        • That's not what's happening here. You live in a world where people pay $250k for a twitter avatar and you need to just make peace with that.
    • I see similar money-laundering scams like this on Amazon, where some random recently out-of-print book (i.e. not a rare or first edition) will be for sale at an absolutely ridiculous price ($1000s) that no reasonable person would pay and can often be found for far less. This type of scam seems to have morphed into a related scam [schneiderdowns.com] of self-published books and ebooks that contain computer-generated gibberish, or are sold under the names of real authors.

  • Eat the rich. (Score:3)

    by zawarski ( 1381571 ) on Thursday September 09, 2021 @05:09PM (#61780583)
    Taste like chicken (allegedly).
  • The people who win are the ones who get the money

  • Jesus F Christ, no one here gives a shit about NFTs. This is not news. This is not nerdy. Stop posting this useless trash. Just because its on The Verge, doesn't mean it needs to be copy/pasted over to here.

    • They care enough to the extent, how can I get in on the gravy train. Even geeks love money.

      • Re: (Score:2)

        by ceoyoyo ( 59147 )

        Well, these are apparently auto-generated. Sounds like a nice geeky gravy train, selling computer generated art for ridiculous amounts of money.

    • This so hard. Nobody is falling for this trash. This proves that rich people are not smart or innovative

  • Why does this feel like a giant money laundering ploy. Transfer large sums of wealth in a transparent in exchange for nothing of value, in a manner that arouses no suspicionâ¦.

    • Re: (Score:2)

      by Jeremi ( 14640 )

      Transfer large sums of wealth in a transparent in exchange for nothing of value, in a manner that arouses no suspicion

      For a manner that arouses no suspicion, it sure seems to be arousing a lot of suspicion!

  • Unreal things being sold for unreal money. What separates us from birds that hoard bits of plastic in the same shade of blue?

  • Such great art pieces. For the price, that's a bargain! The pizza one is my favourite.

  • In addition to my career in software development, I'm a fine art photographer, and I've minted 2 NFTs -- one on Ethereum, one on Polygon. Neither have sold yet (I won't shill, I'm easy to find lol).

    The "cool kids" right now are the big pixel-toon collections, generative art, and digital rendered artwork. But photography (my space) has been getting some attention recently. Photos in the "Twin Flames" collection have been seeing some bonkers prices, but there are plenty of other photographers who are also doi

  • If they'd been monkeys, it'd been bananas.

  • Why do we keep getting the fake extended car warranty phone calls?
    People like this that have money and are too stupid to know better than to throw it away like this.

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