OpenSea competitor LooksRare has confirmed that its team cashed out 10,500 Ethereum (CRYPTO: ETH) worth over $30 million.
What Happened: LooksRare, one of the largest decentralized NFT marketplaces, was the subject of scrutiny on Tuesday after acknowledging that the team had cashed out millions of dollars worth of tokens through Tornado Cash.
To address this:
First off, the amount is incorrect: it’s closer to 10,500 ETH and we have 10+ full-time team members.
You can verify the amount on the blockchain by checking ETH transfers sent out on the analytics tab from the team address.https://t.co/Z4Qkv5T02a
— Zodd (@ZoddLooksRare) February 14, 2022
After news of the team cashing out became public knowledge, the value of the platform’s native token LOOKS dropped by 15% to a low of $1.76 on Tuesday morning before rebounding throughout the day.
Why It Matters: As LooksRare team member Zodd pointed out on Twitter, the fact that the team earned wrapped ETH (WETH) tokens has never been a secret.
According to the marketplace’s official fee structure, whenever users sell NFTs, they receive a LOOKS token as compensation for fees. By staking unattributed LOOKS tokens, the team managed to earn millions worth of WETH in staking rewards.
“The LooksRare team has been grinding night and day for 6+ months with zero compensation until the first team WETH distribution. I can also tell you that team members also collectively fronted more than 7 figures in costs prior to launch,” explained Zodd.
He also went on to state that the reason the team was cashing out using the coin mixing solution Tornado Cash was that team members wanted to maintain their anonymity.
“Privacy is a fundamental right and, as anons, it’s practically a requirement. Welcome to decentralization,” he said.
Still, most members of the community were not convinced with the argument that the LooksRare team was entitled to cash out these large amounts at their own discretion.
Think $500k per team member per month is a little much for the start of a project. Perhaps put some back into your token price.
It may have been written in your docs, but no one expected this amount of ETH to goto the team (I doubt).
Do right thing, start buying Looks w/Eth
— 0xb1 (@0x_b1) February 14, 2022
Price Action: LOOKS is trading at $2.12 on Tuesday afternoon, up 9.39% in the past 24 hours.
Photo by Esteban Lopez on Unsplash