The two allegedly set up an NFT called Frosties. They hired artists to create digital images of cute cartoon characters. These images were then converted into NFTs and then listed on sale at the Frosties website to be paid with the Ethereum cryptocurrency. The purchasers of the NFTs would be eligible for rewards such as giveaways, access to a metaverse game, and staking rights.

They were able to create a lot of hype due to the recent surge of interest in NFTs in addition to creating a sense of FOMO , mainly due to the runaway success of cryptocurrencies such as Bitcoin, Dogecoin and Ethereum. As a result, all of the Frosties NFTs were sold soon after launch. Not long after that, the owners transferred the money they received from investors into a separate crypto wallet and then erased all social media and chat accounts for Frosties. This is commonly known as a rug pull.

The two then tried to launder the ill-gotten crypto by putting it into Tornado Cash, an application designed to enhance crypto transaction privacy by removing the signature of the original source of the funds (in this case, the investors) and replacing it with another.

So how did law enforcement find and identify the two? First, the government issued subpoenas to the platforms they used. Discord, the chat platform used to promote the NFTs, provided information connected to the Frosties promoters’ accounts, including IP addresses and phone numbers. Also, Coinbase, the cryptocurrency platform used by the perpetrators, also provided IP addresses that were connected to the Frosties transactions. The IP addresses led to the home address of one of the perpetrators.

The other used his personal credit card to purchase the use of a Virtual Private Network, presumably to hide his online activity. But he used his personal credit card to purchase the Frosties domain name. Presumably that credit card information was used to obtain other financial information including bank statements.

The two were arrested just as they were about to start another NFT launch, which could have been another rug pull.

From the information in the criminal complaint, it does not appear that the perpetrators were caught because law enforcement was able to break the blockchain’s anonymity. Instead, the two were being careless on several occasions and left a paper (or digital) trail that could be traced back to them. Also, it appears that the major companies will cooperate with government investigations, as they should.

Finally, an argument can be made that there was no fraud. Yes, shutting down their operation soon after collecting all of the investors’ money looks really bad. But it does not appear that the creators of Frosties made specific promises on return on investment. The criminal complaint states that if 100% of the NFTs were sold, the creators would “immediately start on the development of the roadmap, staking, metaverse development and marketing campaigns!” (Emphasis added.) The problem is that the developers were arrested too soon and as a result, they will be unable to carry out their promises. And it did appear that they were working on a second NFT launch, and it is possible that the initial investors could have had first dibs om those new NFTs.

As for the spurned investors, it appears that they are trying to salvage their investment by starting their own NFT called Wrapped Frosties. They have their own take on what happened.

At some point, there will be a way to legitimately do a rug pull. Reputable companies could get involved. NFTs could be useful enough to increase in value in the future. And of course, investors will be required to sign an acknowledgement that this is an investment and there is a risk of loss.

I suspect that we will be seeing a lot more of these arrests and prosecutions in the future. Crypto and NFT scams are not uncommon. The community seems to have a lighthearted take on these by calling them rug pulls. It’s almost as if it is a cost of doing business in the quest to find the one unicorn coin or NFT that will go to the moon.

As usual, not every media story about NFTs does a good job of explaining what the legal rights of owners and investors are around NFTs, with most stories preferring to highlight sexier elements like celebrity involvement or massive transaction amounts or general discussion about how NFT ownership is a must for each and every red-blooded American. I exaggerate on the last one, but there is no doubt that, as with other crazes, fear of missing out is a potent inducement for many to invest in NFTs, even if their level of understanding of what they are actually getting for their investment is lacking.

With all the juice around the NFT space, there remains a significant gap in public understanding about them, including why they are commanding so much attention, with a moneyed or aspirational segment of the public at least. Put another way, there is a need for mainstream folks to develop some NFT literacy in a broader sense — and we as IP lawyers have a significant role to play in the effort. At a minimum, we have an ethical obligation to ensure that the grifters are exposed and the vulnerable are protected, an obligation that extends to making sure that our clients and friends are protected from some of the criminal, or at least unsightly, behavior exhibited by scammers looking to exploit the uninformed “investors” that want to participate in the NFT craze.

Lest you think I am exaggerating the need for greater NFT literacy, please consider the following excerpt from an NYU Law preliminary research paper by leading IP scholars Stefan Bechtold and Christopher Sprigman: “Any discussion of NFTs must immediately confront an unscalable wall of misinformation and hype.” Misinformation and hype are not words that are normally associated with legitimate business areas, which is undoubtedly what leading NFT purveyors are looking to become. At the same time, the authors astutely observe that the current state of play in the NFT space involves wading through a lot of misinformation and hype, often at the expense of the main-street rube looking to make a quick buck by investing in NFTs. Those risks aside, as the authors note, the genius of NFTs is how they have created “a way of making digital works scarce, which is possible because the NFT allows you to identify the owner of the ‘authentic’ copy.” In short, when you buy an NFT, what you are buying is the right to call yourself an owner. The challenge, however, is in understanding what you actually own.

As the authors explain:

The “nonfungible” in “nonfungible token” refers not to the artwork but to the block of code that makes up the NFT. NFTs are often shorthanded as “linking” to an artwork, or “pointing to” or “representing” it. But those characterizations are misleading. NFTs identify a particular digital artwork only in the most general way: They contain a “hash” of the artwork as part of the code that makes up the NFT, and some contain a link to an internet address that displays a copy of the artwork. The artwork itself (i.e., digital code from which the artwork can be rendered by a computer) is not part of the code of the NFT.

Put another way, congratulations to NFT buyers, you are now the proud owners of some digital code. Pot jokes aside, owning a hash just doesn’t sound as cool as owning an NFT. But let’s be clear, just because someone buys an NFT, that almost always also means that they don’t own the underlying copyrighted work that their hash points to on the internet. So it’s a different form of ownership than what we usually think of when someone buys a Picasso for cheap at a garage sale.

While, for now at least, the idea of owning an NFT is perhaps most associated with works of digital art, a more interesting current association with NFTs circles around the idea of NFTs as an entry ticket for a social club of sorts. Take the Bored Apes for example. In the past, if you wanted to associate with celebrities, you could buy the products they endorse, or visit the same South Beach nightclubs they frequent. Now, assuming you own a lot of crypto and can figure out the labyrinthine buying process, you can also join the club of Bored Apes NFT owners. Or if you prefer simple drawings of various cartoon animals, you can buy a VeeFriend NFT, the purchase of which inducts you quite deeply into the GaryVee universe — with admission to VeeCon included. Or the Flyfish Club, which grants NFT holders access to an upcoming restaurant. I realize that for at least some of this readership this all sounds like gibberish. But just like people are willing to pay many thousands of dollars to say they went to the Super Bowl in person or for their golf club membership, so is there demand for NFT “projects” that promise owners they will be included in some kind of exclusive community.

In light of the money involved, it is no surprise that the space has a bit of a Wild West-feel, attracting the usual assortment of scammers and prospectors. At the same time, there has been no hesitation on the part of those who have fallen prey to scams to initiate litigation to recover what they claim was stolen. And recent announcements by various prosecutorial offices of crackdowns on crypto-related scams have included public disclosure of NFT-scammer arrests. As with most things, particularly in fast-growing commercial areas, a cautious approach on behalf of buyers to make sure they are only interacting with reputable NFT sources is advisable.

Ultimately, we are right to assume that NFTs are here to stay. While most of the attention will continue to fall on high-profile transactions for what may seem like obscene amounts of money, the appeal of NFTs to a general impulse favoring collectibles almost promises that additional mass-market NFT projects will eventually take root. Likewise, we can expect that more interesting use cases for NFTs will continue to develop, building on the existing concepts of NFTs as proxies for conference tickets, trading cards, or admission to posh social clubs. Until then, it is worth learning as much as we can about NFTs from a legal perspective, so that we are better consumers of media discussion of the phenomenon. As well as better counselors for our clients, especially those interested in dropping five grand on a Derek Jeter Platinum Signed. NFTs may not yet be for everyone, but the time for IP lawyers to know what they are all about is now.

Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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Technically — and legally — speaking, someone who buys an NFT is obtaining ownership of a particular alphanumeric code that lives on the blockchain, tucked away in a virtual wallet. In theory, this code includes a link to, or some sort of association with, a work of visual art or a song or a hamburger or just about anything else that somebody has thought to tokenize. Now, this code is unique — the “nonfungible” in the NFT initialism — and nobody but the buyer will own this code in this context after purchase. And that ownership will be indelibly inscribed on the blockchain to create a record of the transaction. But the art associated with the NFT is not itself stored on the blockchain or in any way secured, so the NFT is more like a digital certificate of authenticity that proves that one owns a “special” copy of a work of art.

While anything can be tokenized, most of the works that have made headlines have been works of visual art. Picture of anthropomorphic animals and pixelated head and torso combinations are particularly popular. Confusion has arisen because buyers of these NFTs, who at times pay lofty sums for the pleasure, believe that they are procuring more than just a chunk of code. But they are mostly wrong.

It helps to think of NFTs as digital baseball cards, those QFTs (quasi-fungible tokens) whose value for the most part peaked in the 1990s. While your 1989 Upper Deck Ken Griffey Jr. rookie card was not one-of-a-kind, it was (in theory) available only in limited quantities and thus valuable. And while owning the card had its benefits, the holder had no right to make copies of it or stop others from using the photograph on the card.

The same is true with an NFT. If I sold you an NFT associated with a drawing I made of Griffey, you would certainly be in a position to mock my inability to accurately render facial proportions, but you would not be in a position to do anything with that drawing other than hold it or trade it.

This is true due to two fundamental tenets of copyright law.

The first is that the purchase or obtainment of an object — physical or digital — does not give the buyer any copyrights in that object. It is axiomatic, as the court wrote in ITOFCA, Inc. v. MegaTrans Logistics, Inc., that “a copyright is not transferred automatically with the transfer of the copyrighted good [thus] when you buy a book, you don’t obtain the right to make and sell copies of it.” 322 F.3d 928, 931 (7th Cir. 2003). In the digital realm the same is true — if you buy an NFT associated with a monkey picture to use as your avatar you cannot make copies of it without the monkey picture’s author’s consent.

The second is that ownership of a copyright is only transferred when an author signs a written contract that says so. Under 17 USC 204(a) of the copyright act, a “transfer of copyright ownership” is “not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.” This was designed to protect artists from giving their copyrights away and ensure a reliable record of copyright transfers. When an NFT associated with a work of art is sold, it is almost never the case that the author signs anything transferring any rights in the work.

Both of these concepts are germane to the recent dispute between NFT pioneer Larva Labs and holders of the first version of the now very valuable Crypto Punks NFTs. Each one of these NFTs were linked to artwork depicting blocky visages adorned with rock-and-roll motifs like gnarly haircuts or lit cigarettes. These number about 10,000 and are the most valuable collection in the marketplace by most metrics, which is not very punk.

Larva initially offered a version (v1) of the Punks that was marred with a programming flaw that allowed buyers to recover their payment for the NFT immediately after a purchase. Staying with the ballcard analogy, the v1 was the Fleer Bill Ripken of NFTs.

The v1’s error made transactions impossible, or not really worth doing, so Larva sent to all v1 holders a second version (v2) of the relevant Punk and declared the v1s to be worthless. This proclamation became LOL-worthy when it was later discovered that one of Larva’s founders sold off a bunch of v1s just before the proclamation went out, kind of like those senators selling off stocks right before the pandemic hit.

The v2s were exactly the same as the v1s except that the programming flaw had been rectified in the v2s. But this rectification created an issue — there were now two versions of a supposedly non-fungible asset, differing only due to the bug. After a few enterprising souls fixed the bug in the v1s and started selling them, Larva objected. It maintained that the v1s could not be sold and took steps to have them removed from mainstream marketplaces. Holders, though, felt otherwise and continued to offer them for sale. The dispute created havoc across Discord Nation, with cases being made for both positions.

Larva may have the better argument from a legal perspective, though making it in court will shine a light on the messy fact that none of the Punk holders — v1 or v2 — have any real rights associated with the Punk art. Larva, assuming they continue to hold the copyrights, can argue that any use of the Punk’s visual art beyond what it allows is infringement.

An issue for Larva, though, is that when the v1s were first offered up to the public, it had no content license in place. So, it likely does not have the contractual right to force the removal of the v1s from the marketplace. But, it has a particularly powerful copyright position. As noted above, 17 USC 204(a) makes invalid any putative transfer that is not in writing and signed by the author. Larva has a copyright registration for the Punks that identifies it (Larva) as the author. So, when people took ownership of the v1s when first offered, they obtained a string of code, but by law did not receive any copyrights related to the art associated with the code. And ownership alone of the code conveys no real protection should Larva, the copyright holder, enforce the work’s copyrights.

Larva, did just that, using 17 USC 512 of the Digital Millennium Copyright Act to enforce its rights in the Punks. It reportedly issued notices requiring online platforms to remove the v1s, or at least the visual art that is associated with the v1s. Presumably, the platforms could use some other visual asset to identify the NFT, and avoid having to remove the NFT, but that may take the fun out of the process, as it would lay bare that the buyer is only buying a slab of code. The v1 holders are in their feelings over this approach but have not yet taken the step of initiating litigation.

Larva’s legal dispute with the owners of its NFTs is but one of many legal quandaries bubbling up along the blockchain. As the very first of these progress through the courts, it is likely that new forms of digital art will be, as they should, treated similarly to old forms of physical art and any claim that digital assets are somewhat different will take a long time to gain traction.

Scott Alan Burroughs, Esq. practices with Doniger / Burroughs, an art law firm based in Venice, California. He represents artists and content creators of all stripes and writes and speaks regularly on copyright issues. He can be reached at scott@copyrightLA.com, and you can follow his firm on Instagram: @veniceartlaw.

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The Federal Reserve has made no secret of its plans to raise interest rates multiple times this year. Inflation continues to be a concern, as does the seemingly perennial chip shortage, and Russia possibly starting a big war with Ukraine sure isn’t doing anything to assuage people’s concerns about the future either.

Despite some cryptocurrency cheerleaders constantly touting decentralized electronic assets as a means of weathering market swings caused by the whims of global events, cryptocurrencies have been far from immune. On the contrary: Since reaching all-time highs early in November, cryptocurrencies have cratered. Falling prices erased $1.35 trillion in value in the global cryptocurrency market in just under three months — at the all-time high, that would have represented almost half of the total cryptocurrency market.

Even for the most famous of all cryptocurrencies, bitcoin, the price swings have been wild. One unit of bitcoin was going for under $33,000 on the morning of January 24, before the price sprang back up to about $37,000 by the afternoon of January 25.

Investors, from the big banks to the solo day traders, are somewhat used to market volatility. Many investors are hoping for a quick comeback. But people who are buying things, in reality, for their own use, don’t expect their currency of choice to fluctuate wildly in value from one day to the next. The ongoing market volatility continues to demonstrate the uselessness of cryptocurrency as actual currency.

Probably the funniest recent example of this is Melania Trump’s ill-conceived hat auction. The former first lady started the year by auctioning off a designer hat (autographed, of course) that she wore to a state function for the low, low starting price of $250,000. In addition to the hat, the auction lot included a watercolor of Mrs. Trump in the hat, and an NFT of the watercolor image.

What a fun way to cash in on your husband’s cult of personality! The Trump name might not have been hers to begin with, but grifts like this show Melania has slipped into it like a comfy old pair of shoes. Some small print on the auction’s website said that a portion of the proceeds would “provide foster care children with access to computer science and technology education,” but the website was silent on how, exactly, and about what the portion would be. Given what we know about Trump family charities, I wouldn’t hold my breath on any of those poor foster children becoming the next Elon Musk.

Anyway, along with a malfunctioning clock and an indeterminate ending time, one of the problems with this hat auction was that it only accepted bids in the cryptocurrency Solana (abbreviated as “SOL” — an acronym which also somewhat appropriately stands for “shit out of luck”). Solana fell by about 40 percent over the course of just a single week in January, which, of course, led to the starting bid in Melania Trump’s hat auction falling in value by around $100,000. The Solana blockchain also succumbed to an outage on January 21 and January 22. This did not do any favors for the SOL price.

Early on January 25, the website for Melania’s hat auction read “Auction Ended” for around five hours, with the winning bid at 1,800 SOL (this had remained the highest bid for days). At that point, the value of the winning bid was $160,218. However, bidding soon reopened for some reason. When it did, the highest bid remained 1,800 SOL, but the value of that winning bid was up to $177,750 in short order.

I would like to meet the person who went to the trouble of converting hundreds of thousands of real dollars into a cryptocurrency that few have ever heard of just to bid an ever-fluctuating amount of money on Melania Trump’s hat and two pictures of Melania Trump’s hat. “Why?” strikes me as a particularly good way to start that conversation.

At any rate, the saga of Melania Trump’s cryptocurrency hat auction sure injected a little levity into an otherwise joyless market rout. Hopefully next month our portfolios will recover a little, and hopefully whoever winds up with Melania Trump’s hat doesn’t suffer a crushing bout of February buyer’s remorse.

Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

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The SALT event, one of the premier hedge fund industry conferences, kicks off Sunday at the Jacob K. Javits Convention Center in New York, rather than the Bellagio Hotel in Las Vegas where organizers hosted the event 10 times before.

Well, maybe “party time” is too strong a term.

The annual conference in Las Vegas was famous for pool parties, private rock concerts, and exclusive dinners as managers tried to get commitments for big checks from pension funds or other institutional investors…. "There will be a mood of reserved optimism, but the conference won't have the same flash that it did in Vegas," said one person who plans to attend but asked not to be identified for fear of alienating organizers and business associates…. The agenda is studded with panels on cryptocurrency trading, post pandemic best ideas and geopolitics.

Did you say “cryptocurrency trading”? Why, fancy that!

Using a fund that will be known as UNLOX, with Scaramucci as its chairman, the group will focus on a variety of decentralized finance efforts associated with digital currencies like bitcoin…. UNLOX will target institutions to use blockchain to securitize assets such as property, corporate securities and venture capital. The group will also target the nascent push into nonfungible tokens and other alt assets.

The blockchain operation of Algorand will be the crypto base for the partnership, while NAX will provide commercial support and SkyBridge will be the institutional base for the fund…. A formal announcement on the initiative will happen Monday morning at SkyBridge’s SALT conference….

In fairness to the Mooch, he’s not alone. Why, even real hedge fund managers are getting involved.

Brevan Howard… said on Monday that it had set up a new unit dubbed BH Digital, which will manage cryptocurrencies and digital assets. It has appointed Colleen Sullivan, chief executive and co-founder of specialist cryptocurrency and blockchain technology firm CMT Digital, to lead its “private and venture investment activities in crypto.”

Oh, yea, and also everyone else. Almost literally.

One group of crypto lenders has $25 billion in loans outstanding to individual and institutional clients, up from $1.4 billion a year ago…. Many borrowers use the loans to amplify their bets on crypto. Kris Kostadinov, who goes by Kris Kay, took out a loan worth $14,000 in the tether stablecoin from the decentralized-finance platform Aave earlier this year and used the proceeds to buy ether. He used the ether to trade in and out of nonfungible tokens, or NFTs, which are blockchain-based authenticity certificates attached to digital assets such as artwork and sports highlights.

Stock exchange SIX said its new SIX Digital Exchange, or SDX, will let investors, via regulated institutions, trade, settle and store digital tokens through one venue, underpinned by “the highest Swiss standards of oversight and regulation.”

Prosecutors said that Christopher Naples, 42, of Mattituck, L.I., had hidden 46 specialized devices used to mine Bitcoin and other cryptocurrencies in six rooms in the Suffolk County Center in Riverhead, including underneath floorboards and inside an unused electrical panel…. Prosecutors said that at least 10 of Mr. Naples’s machines had been running since February, costing Suffolk County more than $6,000. Mr. Sini said that given that 36 more machines had been discovered, it was likely that Mr. Naples had cost the county thousands more.

The Taliban takeover of Afghanistan has fueled a surge in the use of cryptocurrency as Afghans grasp for ways to cope with a deepening financial crisis, market analysts and local traders say, a trend that may offer hope for an ailing economy, but that poses concerns for Western security officials…. If the Taliban were to adopt cryptocurrency as part of a national economic policy, it could aid efforts to circumvent some Western sanctions and other leverage against the country’s new rulers….

Cryptocurrency exchange platform FTX is trying to level up in the U.S. with more established competitors through a new ad campaign featuring the married couple of football great Tom Brady and model and businesswoman Gisele Bündchen.

The U.S. affiliate of international crypto derivatives exchange FTX plans to invest $20 million in the campaign, which begins Thursday during the National Football League season kickoff game between Tampa Bay and Dallas.

Best keep in on this side of the Atlantic, though, guys.

Charles Randell, head of the U.K.’s Financial Conduct Authority, said [Kim] Kardashian’s post might “have been the financial promotion with the single biggest audience reach in history….”

“I can’t say whether this particular token is a scam,” Mr. Randell said in a speech Monday to the Cambridge International Symposium on Economic Crime, according to a copy posted online. “But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation. Some influencers promote coins that turn out simply not to exist at all.”

Scaramucci's SALT hedge fund confab returns in person in New York City [Reuters]
Scaramucci’s SkyBridge accelerates its move into crypto with a blockchain partnership [CNBC]
Brevan Howard to ‘significantly expand’ crypto asset push [FT]
Bitcoin to Bucks: Crypto Fans Borrow to Buy Homes, Cars—and More Crypto [WSJ]
Switzerland Gives Green Light to Crypto Trading Exchange [WSJ]
County I.T. Supervisor Mined Bitcoin at the Office, Prosecutors Say [NYT]
Growing Use of Cryptocurrency in Afghanistan Poses Security Concerns [WSJ]
Tom Brady and Gisele Bündchen to Star in $20 Million Campaign for Crypto Exchange [WSJ]
Kim Kardashian’s Instagram Post on Cryptocurrency Prompts U.K. Financial Watchdog to React [WSJ]

For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.

Speaking at a legal conference Wednesday, Securities and Exchange Commission official John Coates said there are “some significant and yet undiscovered issues” with SPACs…. Those issues are “not something that’s going to stop them by any means, but they are relatively as yet incompletely worked through mechanisms, despite the fact they have been around for a while,” said Mr. Coates, who is acting director of the SEC’s Corporation Finance division…. “Their current surge is bringing the level of attention by many more participants in the market than previously had been involved, and that is turning up some questions that have to be thought through more carefully,” said Mr. Coates, who spoke at a legal conference sponsored by the Practising Law Institute.

Coates didn’t elaborate on those issues or questions or what prompted them, but we can’t help thinking that a trading card company mumbling something or other about NFTs taking advantage of the SPAC route at the moment at which both the SPAC craze and bored hunger for spending your money on crap abate as the pandemic subsides and people are mercifully able to do something else with their lives might have something to do with it.

Topps, which is best known for its baseball cards and Bazooka candy line, has agreed to go public through a merger with Mudrick Capital Acquisition Corporation II, a special purpose acquisition company, that values Topps at $1.3 billion…. While Topps is best known for its sports trading cards, it has branched out into interactive mobile apps to connect collectors and recently expanded into nonfungible tokens…./“This is the icing on the cake, going digital completely, with the analog still in place,” [Topps Chairman Michael] Eisner said.

A more perfect nutshelling of this deal than that perfectly meaningless and self-contradictory statement we certainly can’t imagine. It must be nearly impossible for the folks at Patreon to hold themselves from taking advantage of these rubes while they still can.

And speaking of getting in a little late, Jim Cramer thinks it’s a great idea for at least two companies.

“If you care about the future of either company or the long-term trajectory of their stocks, issuing shares up here is the right move,” Cramer said. “But the ‘hold the line’ crowd they hate these offerings … and they despise anyone who defends them….”

“AMC and GameStop need money,” Cramer said. “Raising capital is good for both companies and over the long haul, what’s good for the company should be good for the stock.”

For now, let’s give the last word to Carson Block, who ties these storylines together quite nicely.

"You've got the companies that are really deserving of being shorted, and then you've got the companies that you actually can short from a technical perspective. A lot of the intersection right now is SPACs."

Topps to go public through SPAC deal as baseball card company ventures into NFTs [CNBC]
SEC Official Warns on Growth of Blank-Check Firms [WSJ]
Patreon’s Valuation Triples to $4 Billion as Platform Draws Creators, Fans [WSJ]
Cramer says AMC, GameStop plans to sell more shares will be good in the long term [CNBC]
Short-seller Carson Block discussed GameStop, SPACs, and Archegos in a recent interview. Here are the 10 best quotes. [BI]

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Shares in the food delivery business had been offered to investors at 390p each, but dived in early London trading to 275p at one stage, a 30% fall…. Shares later recovered some earlier losses to trade down about 10%....

"Deliveroo has gone from hero to zero as the much-hyped stock market debut falls flat on its face," said AJ Bell investment director Russ Mould.

The impending end of the Covid-19 pandemic, and with it the end of the attendant boredom and government handouts, isn’t just bad for food delivery apps and IPOs. Lots of other lockdown-based bubbles are preparing to pop, if they haven’t already.

“Say you’re 22 and you’re single and you kept your job and now you’ve got $3,200 over the last year. That’s a lot of money to play with. You can’t go to bars, so you’re online. You’re on Reddit and Discord,” said Caroline Fohlin, a professor of financial market history at Emory University.

Many expect vaccinations and business reopenings could sap demand for NFTs once people are spending less time at home and can shop and travel normally. That could send prices sharply lower…. “Collectibles rallies often end up being short-term crazes and bubbles,” [financial adviser Chris Clepp] said.

In a sign of how the frenzy has calmed, SPACs are rising an average 0.1% on their first day of trading so far this month. That is down from average gains north of 5% in January and February…. From November to February, 231 consecutive SPACs went public without dropping below their IPO price on their opening trading day, a historic stretch that saw investors pile into the vehicles. Now, it is common for SPACs to dip below their debut price—typically set at $10—and gyrate around that level until a SPAC announces what company it is taking public.

There may be a way to save some of these bubble from themselves. But Izzy Englander isn’t going to like Andrew Ross Sorkin’s SPAC solution.

Investors and celebrities who put their names behind the next big headline-grabbing merger can exit long before any of those projections are ever realized or, in many cases, missed…. What if sponsors were required to hold their shares, including any investments they made at the time of a deal, for the full duration of the financial projections that helped sell the merger?...

Lynn E. Turner, a former chief accountant for the Securities and Exchange Commission, called the proposed fix “an excellent idea.” Because sponsors are the ones advertising “here’s what we’re going to do in this time period,” he said, “they should be locked into that.”

Deliveroo shares drop 30% on stock market debut [BBC]
After NFT Surge, Traders Worry Reopening Will Stifle Rally [WSJ]
SPAC Excitement Fades as Historic Quarter Ends [WSJ]
How to Fix SPACs: Keep Their Backers Locked in Longer [DealBook]