NFTs are crypto assets that record the ownership of a digital file such as an image, video or text. Anyone can create, or “mint,” an NFT, and ownership of the token does not usually confer ownership of the underlying item.
“There’s a spectrum of activity that is happening that basically shouldn’t be happening — like, legally” Hejazi said.
While the Cent marketplace “beta.cent.co” has paused NFT sales, the part specifically for selling NFTs of tweets, which is called “Valuables,” is still active.
Hejazi highlighted three main problems: people selling unauthorized copies of other NFTs, people making NFTs of content which does not belong to them, and people selling sets of NFTs which resemble a security.
He said these issues were “rampant,” with users “minting and minting and minting counterfeit digital assets.”
“It kept happening. We would ban offending accounts but it was like we’re playing a game of whack-a-mole… Every time we would ban one, another one would come up, or three more would come up.”
“Money chasing money”
While Cent, with 150,000 users and revenue “in the millions,” is a relatively small NFT platform, Hejazi said the issue of fake and illegal content exists across the industry.
“I think this is a pretty fundamental problem with Web3,” he said.
OpenSea tried limiting the number of NFTs a user could mint for free, but then reversed this decision following a backlash from users, the company said in a Twitter thread, adding that it was “working through a number of solutions” to deter “bad actors ” while supporting creators.
“It is against our policy to sell NFTs using plagiarized content,” an OpenSea spokesperson said.
“We are working around the clock to ship products, add features, and refine our processes to meet the moment.”
But Hejazi said his company was keen on protecting content-creators, and may introduce centralized controls as a short-term measure in order to re-open the marketplace, before exploring decentralized solutions.
It was after the Dorsey NFT sale that Cent started to get a sense of what was going on in NFT markets.
“We realized that a lot of it is just money chasing money.”