An unusual auction format has sparked a legal dispute in the NFT community, where art collector Amir Soleymani is refusing to pay the NFT trading platform Nifty Gateway $650,000—what he thought was a losing bid—for a third edition Beeple NFT.
The auction for Abundance, a new work by the digital artist who set the NFT art world ablaze with his $69 million Christie’s sale of Everydays: the First 5000 Days in March, took place on Nifty Gateway in May. Taylor Gerring, the cofounder of Ethereum, won the auction with a $1.2 million bid. He received six NFTs and Beeple’s custom display case.
Nifty Gateway’s auction page for Abundance lists the 100 top bids, which start at $35,075. Gerring is identified as the “ULTIMATE FUCKING WINNER,” with the site proclaiming “EXTREME CAUTION: THIS PERSON IS BETTER THAN YOU IN EVERYTHING, THEY ARE MORE PERFECT HUMAN BEING AND I WOULD NOT ATTEMPT TO ACTUALLY MAKE EYE CONTACT OR THEY WILL MOST LIKELY MELT YOUR SOUL.”
Noted NFT collector Justin Sun, founder of cryptocurrency Tron, was the underbidder at $950,000. (He also came in second in the Everydays auction.)
But instead of going home empty handed, he and Soleymani were asked to make good on their bids. Along with the other top nine underbidders, they would receive the second edition of five NFTs, plus the physical display case. Bidders 11 through 100 would receive editions of a single NFT, and the device on which to display it.
“Imagine bidding to win an item, ending up in second place and getting almost the same thing the third bidder gets but with a significant difference in bid amount,” Soleymani told the Art Newspaper. “This method of auction maximizes revenue for the platform and artists but is damaging to collectors.”
Soleymani refused to pay, and Nifty Gateway froze his account, which has the user name Mondoir and reportedly contains hundreds of thousands of dollars’ worth of NFTs. Nifty Gateway filed in New York for arbitration in July, according to ARTnews. Soleymani responded last month with a lawsuit with the U.K.’s High Court.
The collector bid on the piece “with the intention of acquiring the original artwork offered for sale in the Abundance Auction and not the third or any other edition thereof,” Soleymani’s complaint claims. It adds that the ranked auction format’s terms are “unfair and do not bind him.”
The collector claims that the English Consumer Rights Act of 2015 exempts U.K. resident from the terms of use for Nifty Gateway, a New York-based company. But Soleymani also contests the overall validity of the ranked auction format.
“NFTs that are not ‘first edition’ are acknowledged to carry significantly lower value than first editions,” argues a statement released by Soleymani. “It is highly unlikely that a third edition NFT, no matter the provenance of the work, would elicit a bid anywhere near the value of Mr. Soleymani’s bid for the first edition of Abundance, if auctioned as an individual lot.”