On December 19, one week before he returned from an injury just in time for a horrid loss that coach Alvin Gentry said made him "the most disappointed I have been in 34 years in the NBA," De'Aaron Fox made an announcement. It was time for Fox to "connect my fans and some of the sports world with what I think is the future," by which he meant he would soon be launching a line of De'Aaron Fox NFTs. Fox wanted everyone to know the Discord channel was up and running and that the digital artist 4FUN would be the one drawing the forthcoming NFTs. Soon he announced a robust suite of offerings for those who bought NFTs and joined the community. But two months and 6,005 sales worth over $1 million later, the project has been suddenly canceled, with many people essentially out thousands of dollars.
On Thursday, Instagram and Twitter accounts connected to the Swipa The Fox NFT launch were deleted, before they were reactivated in private mode. Fox himself addressed the Swipa The Fox NFT Discord on Wednesday afternoon, announcing the shutdown of the project in vague terms ("The involvement to grow the project up to the NFT communities [sic] standards is not something that is possible at this time") and promising limited buy-backs for fans who purchased NFTs from his "story collection" and signed jerseys for some others. Absent their in-metaverse use case and creator support, the price of Swipa The Fox NFTs cratered, infuriating those who spent money on them. Several watchdog accounts called it a rug pull.
What exactly is going on here? Since this saga involves NFTs, a series of Discord servers, and opaque financial machinations, it can be somewhat hard to parse (I got a lot of help from adept crypto sleuth ZackXBT), so we should move in chronological order. Fox first announced the NFTs last December, then the following month, started revealing what benefits were in line for those who purchased NFTs. Both of these occurred during the NBA season, a fact we will return to soon. The benefits included the chance to play video games with Fox, access to a virtual basketball court located somewhere in the metaverse, and a scholarship to the University of Kentucky, located in Kentucky. The benefits were tiered, and some member who joined a tier (known as the Green Team) with a 0.3 ETH buy-in could get "one on experiences"(?) with Fox.
The NFT line launched on January 12, and within a month-and-a-half, 6,005 NFTs has been minted out of a planned 10,000. When one mints an NFT, one pays the creator some amount of Ethereum in exchange for the token and then it's yours to do with what you wish, for example, make it your profile picture or show it to Jimmy Fallon. You can also sell it, and indeed, the most someone has paid to date of a Swipa The Fox NFT is 0.997 ETH, which is worth roughly $2,725 now, though most of the NFTs in question were minted when the price of Ethereum was 10 percent or so higher. Most people paid 0.085 ETH as a mint price, and total sales netted Fox around 420 ETH (he also had a line of limited, more expensive NFTs which are videos and not jpegs with a mint price of 0.3 ETH; they brought in another 50 ETH.)
A core part of the sales pitch was not just that you had the chance to buy a digital asset that could appreciate in value, but that you could be a part of the community Fox was to build in the metaverse, or, as previously mentioned, attend the University of Kentucky. You wouldn't just be buying a picture of a cartoon fox, you'd be buying a picture of a cartoon fox that you could then assume the form of and go play basketball in the metaverse. It's not my thing personally, though I can see the appeal. The Swipa The Fox NFT Discord bloomed, awaiting their forthcoming meeting on Swipa Island (alleged to be the first island created by an athlete in the metaverse). Unfortunately, this is when things went sour.
On Wednesday, Fox made the announcement that the project, which he started in the middle of the NBA season, would have to be shut down due to the demands of said season. The Swipa The Fox NFT Instagram and Twitter pages went down and then private; Fox shut down all comments on his official social media pages; the NFT website went dark; and the floor price collapsed down to 0.003 ETH. That is worth, at the time of writing, $7.93, well below the $285 that the mint price would have been worth on January 16. Fox and his team promised to buy back the assets of higher-tier users and send out some signed jerseys in an attempt to make others whole, though not everyone qualifies.
The argument that an NFT inherently has no use case—that this is all just trading tulips for money since the form an NFT takes is typically a jpeg that anyone can simply save to their desktop regardless of whether or not you paid Ether for it—holds a certain amount of water in many cases. However, in this case, the explicit appeal to the aspiring Swipa The Fox NFT collector is that they could use their avatars in the metaverse to hang out on an island and stuff. Thus when that line of development gets shut down, it directly craters the value of the extant Swipa The Fox NFTs. You still have possession of your NFT, but now you can't do anything with it, so who would want to buy that?
The downed use case is one aspect to the collapse here; the other, value, is even simpler. NFT sales rely on a certain amount of faith, a collectively held belief that whatever token is being sold will retain its value. Unlike with more fungible goods, or even bog-standard securities, NFTs are not really pegged to anything except the aesthetic value of the art itself and the credibility of the people behind a project. Whether or not Fox actually wants to make good on his promise to relaunch the brand this summer is almost irrelevant now. Who would put more money into a project that's already gone through this level of turmoil? It is not entirely clear the degree to which he was involved with the end of this project, and his own statements are somewhat contradictory (did he not have enough time to work on this project or were his "professionals" not up to snuff?), but even in the most sympathetic version of events, he has burnt his goodwill within the space. The creator of Chibi Dinos, a "basketball-inspired NFT collection" that Fox had a promotion deal with, cut ties with him on Thursday. Here is co-founder Sean Kelly's statement, which misspells Fox's name four times, from the Chibi Dinos Discord:
I talked to several people who bought Swipa The Fox NFTs, including one fan who spent nearly $1,200 to mint four of them. "I’ve come to peace with it," they said. "I just hope Fox doesn’t get let off the hook for his actions." Aggrieved NFT-buyers started a Discord to organize, take stock of their losses, and try to track where all that Ethereum went (a lot of it is in these two wallets). People not in line for buybacks feel betrayed, and would like, if not full reimbursement for their since-incinerated investments, some form of justice. The legal precedent for recovering pilfered NFTs is not great, and the internet abounds with cautionary tales about people getting swindled in pump-and-dump schemes, hacked for their Bored Apes, and generally taken for a ride in the ways one might expect in a largely unregulated space. That is not to say that anyone deserves to be scammed for supporting their favorite basketball player. Everyone is mad, with good reason, including this guy who burnt his Fox jersey.
I talked to a former Fox fan who had some of his story collection NFTs bought back, and while the Fox team did pay the full mint price, the collector ended up out a couple hundred dollars. After re-listing the items on OpenSea, plus having to pay the obligatory 10 percent cut to the creators (on a sale of their own asset back to them), and transaction charges known as "gas fees," the collector ended up 0.12 ETH ($327) in the hole. Still, they knew most people wouldn't see any money whatsoever. "That's the sad part," they said. "A lot of the people in here are first time NFT [buyers.] And they got in because they are De'Aaron's fans."
Anyone can see where all of the Ethereum in question went, though the list of wallets (and the reality that the community wallet in charge of buybacks only has 44 ETH in it) doesn't really answer the question about what's going on here. Fox is in the first year of a $163 million contract, so he doesn't have a logical incentive to risk his reputation for $1 million. Fox claims that this is not a rug pull of any sort, and that everything will get back on track. But even before this week's shenanigans, trouble surrounded the project. A number of fake accounts pretending to be the official Swipa The Fox account popped up in a crude attempt to scam users out of their NFTs, which is to be expected for basically any sizable NFT project. Some time around February 17, someone connected to the project who goes by Chief and had been hosting Twitter spaces and running official promotions for the NFT team left the project suddenly, throwing the whole affair into apparent turmoil. "We are in talks with D’s team right now to decide on who should replace Chief’s role and make some big changes to better reflect the vision this project started off with," 4FUN wrote in the Swipa Discord. Their message was the last official communique in the Discord's announcement's channel before Fox's announcement that the project was going on hiatus.
The Kings did not answer an email from Defector seeking comment, and messages from a Swipa The Fox NFT holder to Fox's representation also did not go answered. If there's a silver lining for Swipa The Fox NFT fans who still have hope that the project can be salvaged from the state it's in, consider: Fox said he'd get back to it in the offseason, and seeing as how he plays for the Sacramento Kings, the offseason isn't that far away.
h/t Alex
