Not so Magic Eden

GM. One day down, four to go. We’re here to give you the latest in crypto as you settle into your week. For starters, there are grumblings that Magic Eden is too centralized. Plus, a legit use case for NFTs in the music industry and the SEC levies allegations in a massive Ponzi scheme.

Today’s Topics:

• Escrow or no at Magic Eden?

• Get ready for the future of music (It’s NFTS!)

• SEC making allegations in $300 million scheme

• Quick Links

Is the Magic Wearing Off at Magic Eden?

Criticism is mounting against Magic Eden as many within the industry are concerned that its escrow-based trading is leading to centralization. The Solana-based NFT marketplace - which owns more than 90% of all NFT trading on Solana - is facing accusations that it is leaving user assets susceptible to hacks, among other things.

Perhaps the most damning piece of evidence comes from Marty, the founder of Zion Lab. He states that, “People should be 100% aware that a hacker could get the keys to Magic Eden and “rug” everyone of their NFTs. This wouldn’t happen if it was decentralized and if their code was open-source.”

The platform countered by saying that the alternative to its escrow-based model would be less safe for its users while completely ignoring problems with its current system. While Magic Eden does plan to make its platform escrow-less in the future, it doesn’t believe the tech is available to do so at this time.

But there are more red flags coming from Magic Eden than just its escrow-based trading model. For example, the NFT trading site made a change to its contract code that requires Magic Eden to sign off on all transactions that take place on its marketplace. Magic Eden waves this off as a way to “maintain core site reliability” and “reduce botting.”

Sounds like a pretty thin excuse to us.

Making Music with NFTs

Image: Muse

Let’s move away from the negative of NFTs and talk a little bit about exciting news in the NFT industry. Muse, a British rock band, made waves today when it announced that its next album will be an NFT eligible to qualify for the charts in both the UK and Australia.

Interestingly, fans won’t need to own a crypto wallet to purchase the NFT. When the album is purchased, a new crypto wallet is created and the NFT is automatically moved to it. However, if you already have a wallet, you have the option to move the album to it.

There will only be 1,000 copies of the album available for purchase and each copy will be digitally signed by the band. Plus, if you decide to sell the album at some point in the future, you can do so, with 15% of the resale price going to the band.

Releasing an album that qualifies for the charts is a step in the right direction for NFTs in the music industry. Don’t be surprised to see new releases offer additional tracks or fan rewards in the future. This might be the beginning of a beautiful relationship.

For Shame Forsage

The SEC dropped charges on 11 people today for their roles in a $300 million crypto Ponzi scheme. Forsage, the project in question, claimed to be a decentralized smart contract platform, but was really a massive pyramid scam, using new investor money to pay off those who joined earlier.

For more than two years Forsage allowed investors to enter transactions using smart contracts on Binance, Ethereum, or Tron. The platform aggressively pursued additional investors in an effort to continue giving off the appearance that it was a legitimate operation.

In addition to the 11 individuals charged, the SEC has also charged several US-based promoters who advertised and endorsed the platform through its social media channels. This comes after many regulators have attempted to shut down the scheme over the past few years.

Good riddance.

Quick Headlines

More Helium - After allegations that the crypto-powered wireless network lied about its partnerships, Helium promised a more rigorous market brand process. Insert eye-roll here.

AMP Out - The SEC has claimed that AMP token is a security, which means Binance.us will delist the crypto on August 15th.

Going global - Here’s an interesting piece on how blockchain technology can revolutionize the way we view international trading.

Ready, set, GHO! - GHO stablecoin launch approved by AAVE DAO with a whopping 99.9% in favor.

No confidence - Vitalik Buterin made waves over the weekend when he suggested that current corporate attempts to get the Metaverse off the ground are going nowhere.

Funding News:

Another round - Hardware wallet manufacturer Ledger is looking to raise at least $100 million as investors turn to cold storage

Hacks:

Down the drain - Exploiters drained the Nomad token bridge of $190 million in just a few hours.

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Disclosure: We are a newsletter for information only. We are not financial advisors nor do we claim to be. Consult your legal, investment or tax advisor. Crypto is risky. Do you own research.