Vault by CNN shutdown results in “rug pull” accusations from NFT buyers

Monday afternoon Parker Molloy has pointed out this factCNN’s big Web3 project was ended by An announcement, “we have decided that it’s time to say goodbye to the Vault by CNN.”

Vault by CNN, which you may have forgotten about, was launched in summer 2021 as a marketplace to sell its NFTs.non-fungible tokens) that would “offer collectors the opportunity to own a piece of history.” Sort of like NBA Top Shot except for media nerds instead of basketball nerds, it minted CNN reports of key events or artistic interpretations inspired by them, creating digital collectibles that owners could show off somehow or trade with others, like baseball cards. This idea apparently seemed more reasonable while cryptocurrency prices were sky-high, and headlines about NFTs didn’t include phrases like “trading volumes collapse 97 percent since January peak.”

Things have obviously changed as the “crypto winter” settled in, although an April report by the Press GazetteCNN claimed that the sales had brought in over $300,000.

In a Discord channel for the service, another message informed owners that while the Vault website will “undergo changes,” it will remain available for them to view their collections and use its marketplace. Reactions from the community included shock, disappointment, and a few posters saying they planned to contact their lawyers while accusing CNN of a “Rug pull,” which in crypto terms applies when a development team unexpectedly yanks support — and funds — from a project, leaving the people who bought in with nothing.

In the Discord, CNN said it plans to compensate “the thousands of collectors who joined us in this experiment” with distributions based on the purchase price of each wallet’s NFTs as captured on October 6th. In a separate message from CNN, staffer “Jason” said, “The distribution will be either FLOW tokens or stablecoins deposited into each collector’s wallet. We are currently working out the details, but expect the distribution amount to be roughly 20% of the original mint price for each Vault NFT owned.” He also noted that the actual media for the NFTs is stored in IPFS, a distributed file system that should mean they’ll continue to be available even if CNN’s website goes away.

So far, that doesn’t appear to be enough to put collectors at ease after they expected that tokens published by an established brand like CNN would experience more support than many shadier NFT projects. As one message in the channel put it, “you can’t simply say goodbye but your NFTs are still ok and now more rare… without a community (discord at least) and no utility… it’s not an NFT anymore but a mere digital copy…”

Another member pointed to a potential problem with the Vault’s reliance on the Flow Blockchain, the same Dapper Labs-made platform that powers NBA Top Shot and NFL All Day. Flow’s support documents mention that it allows withdrawals in the USDC stablecoin that’s pegged to the value of the US dollar at a minimum of $10 per transaction with a $4 processing fee. The cheapest NFTs on CNN’s marketplace are listed for $19 — if someone owns one of those, their rebate would be around $4, or even less, leaving them with no return if they could withdraw it.

I spoke to one individual who shared their wallet address and estimated they’d purchased as much as $11,000 worth of CNN tokens from its marketplace. Without ongoing support and after a 20 percent rebate, they have little reason to believe the collection’s value will remain close to that level.

CNN continued to push community members to purchase more tokens, even last month. This was to ensure that they had enough tokens to be able to attend events such as the Art of Voting NFT Series, which will drop on November 8th, midterm election day. Collectors would need to own at least one NFT from a particular set to get a key to access the Art of Voting set and other unspecified “exclusive benefits.” Documentation for Vault by CNN included a section describing the fabled “utility,” listing Exclusive CNN Perks and Exclusive CNN Vault Merch as “coming soon.” A roadmap of promised features even indicated that later this year, people would be able to mint any CNN article as an NFT if they wanted to for some reason.

Although there was no reason for the shutdown, The Wall Street Journal wrote “NFT Sales Are Flatlining” on May 3rd of this year, and things haven’t improved since. However, Vault by CNN managed to last 16 times longer than the. CNN Plus launched its streaming service in MarchAnd he died just one month later.

According to the Vault marketplace website — which does not include a note about the shutdown — the most recent transaction prior to the announcement occurred five days ago, on October 5th, when someone bought a “CNN Defining Moments” token commemorating Nelson Mandela’s release from prison for $77.

The Discord message also informed holders of CNN’s plan to “burn” unsold NFTs, which it says will make the ones they hold rarer, and thanked collectors for joining the “experiment.” Until today’s message about the Vault’s shutdown, we could not find any reference to the project as an “experiment” within CNN’s extensive tweets, Discord broadcasts, and press materials. Garrett Cowan, a CNN publicist tells us in an email The Verge The message mentions that the six-week experiment was an internal test in preparation for the public launch of June 2021.

CNN is just one of many notable brands and personalities who launched NFTs during their so-called “bull run” over the last couple of years but failed to pay off community expectations.

Athletes are a visible example, with NBA star De’Aaron Fox Rug pulling: after his Swipathefox project collected $1.5 million and shut down without delivering the promised benefits, or the Player’s Only NFT effort promoted by athletes like Michael Carter-Williams and Jerami Grant, which Earned $1.4 million, but failed to deliver on the promises.

League efforts aren’t doing much better: prices and activity on NBA Top Shot They have dropped sharply from their peak, it’s unclear how NFL All Day is doing because I’ve never seen anyone talk about it, and The NHL has announced plans to launch an NFT market in July., it hasn’t actually done it or shared any details on the project ever since. A few days back, Lucky TraderReports state that UFC Strike NFT, which also runs on Flow, has paused pack drops. It credited buyers with partial refunds after a user allegedly exploited several drops recently to obtain rare items.

The following media outlets are also available: Associated PressThe launch of an NFT marketplace at the peak in January prices caused controversy. It was intended to raise funds for journalistic endeavors. Now, The AP NFT marketplace shows little to no activity on many recent drops, and a link on the page pointing to the project’s Discord doesn’t work.