The day before NFT.NYC kicked off this week, the Web3 world saw a seismic shift — NFT guru Noah Davis announced that he was leaving Christie’s, where he helped organize Beeple’s record-setting $69.3 million Everydays sale, to head NFT collection CryptoPunks, which was bought by Bored Ape Yacht Club parent company Yuga Labs this past March.
Rumors of insider trading spread quickly at the Web3 conference as observers of the space noticed that trading volume for the CryptoPunks collection spiked over 957% in the 24-hour period (relative to the previous 30-day average) before Davis’s announcement.
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Trading data public on CryptoSlam!, an NFT industry data aggregator, shows that CryptoPunks experienced a whopping 115 transactions on June 18th for a total trading volume of $8,120,614. In the previous three months, trading never exceeded 34 total transactions per day and was most often in the low teens and single digits. Sale prices over that period never exceeded $6.7 million and most often was in the $500,000 to $2 million range.
Key buyers like Gary Vaynerchuck, an investor in YugaLabs, and BeanieMaxi, a huge influencer in the space who has been accused repeatedly of fraud and shady deals, were among those who scooped up CryptoPunks in the hours before Davis’s announcement.
Vaynerchuck denied that he had access to special informationin a tweet.
“[No insight just always will buy punks when i can and want to,” Vaynerchuck wrote in response to a question about why he bought CryptoPunks on the 18th.
Those crying foul play claim that someone must have leaked the news to a select few, even going so far as to draw a comparison to the recently arrested Nate Chastain, who the FBI charged with wire fraud and money laundering earlier this month in connection with NFT trades made during his tenure at OpenSea, the largest NFT platform in the world.
As yet, however, it is all speculation. There is no proof that Davis or anyone else leaked information about his impending move to CryptoPunks. Regardless, the timing left some in the NFT community frustrated and claiming that “alpha groups” are manipulating the market.
But what are these ‘alpha groups’?
WazzCrypto, an NFT community member who first published a thread on his investigation into the Punk spike preceding the announcement, described them in a private message.
“Generally alpha groups are private chats (on telegram or discord for example) where u only have access by invite or holding a certain NFT. Lots of big collectors and influential people hang around in these chats which is why there is ‘alpha’ to be obtained from there,” WazzCrypto wrote to ARTnews. “Certain info definitely leaks in those places before anywhere else. Someone feeds or leaks some info there, and then it trickles down to sub groups or to the public eventually, causing a momentum in the market.”
These alpha groups range from the accessible to the merely legendary. On the accessible side, you have groups like Admit One or the Proof Collective, started by NFT influencers Gmoney and Kevin Rose respectively. Each group is accessed by owning a limited edition NFT, whereupon the holder will be privy to a private Discord server, and hopefully the influencer-traders who are themselves tapped into even more exclusive networks through which valuable information flows.
Others in the Web3 space said there were other factors that could have contributed to the spike.
“It was a good time to enter the Punk ecosystem because the floor price is almost half what it was a few months ago, plus the ETH versus dollar rate is in a good position,” Fanny Lakoubay, a Punk holder, told ARTnews. “So it was a good opportunity for collectors to get in, but this is maybe a bit naive. It’s just a very, very big coincidence.”
Lakoubay, however, said she isn’t concerned and reported that the Punk holders she knows and met with during NFT.NYC were happy with the choice to bring on Davis to lead the collection.
“They could have chosen anyone, even a rapper,” Lakoubay said, referencing the decision announced Wednesday to have Pharrell Williams lead the Doodles NFT project as Chief Brand Officer. “The fact that they picked Noah is, in my opinion, a very positive thing.”