NFTs like Moonbirds, BAYC, and others may have “misled” their customers, claims report

August 25, 2022

By Murtuza Merchant

Research by Galaxy Digital has revealed that Moonbirds and Bored Ape Yacht Club mislead its customers regarding IP rights.

According to the research, it appears that they are falling short in the way when they issue IP rights to owners.

How Moonbirds and BAYC deceived buyers

According to the investigation, a considerable number of issuers, including Yuga Labs, appear to have misled NFT buyers about the ownership of the material they offer.

It’s interesting to note that just one of the top 25 NFT collections (World of Women) even makes an attempt to grant intellectual property rights to NFT buyers.

The Creative Commons licence, which has recently been in the spotlight, is the source of the problems.

The IP is moved into the public domain, which basically means that anybody can use it for creative purposes, removing NFT ownership completely, despite the fact that it is considered a solution to the projects’ restrictive licencing from a legal standpoint.

As a result, NFT owners are unable to assert their ownership rights in court.

Unfortunately, everyone’s thoughts and ambitions for the future of web3 may not be feasible without advancements in the on-chain representation and transfer of IP rights from issuers (like Yuga Labs) to token holders (the consumers).

How can this be resolved?

Some initiatives have addressed the concerns raised in the research in novel ways, and they have discovered a means to avoid misleading their customers by being completely transparent.

Doodles, one of the best NFT projects, has addressed issues in a distinctive manner.

They let users create derivative works with a cap on the amount of money they may generate. Additionally, this limits users’ ability to alter the original artwork.

As an alternative, Gary Vaynerchuk’s VeeFriends exclusively permits users to utilise their NFTs for personal purposes.

This implies that they are not allowed to produce their own goods for sale.

Additionally, some projects use the Creative Commons Zero licence (a.k.a. no rights reserved).

This basically means that everyone, not just NFT holders, is permitted to utilise the artwork for derivative works.

The most known effort that adheres to this licence is the “Nouns” NFT collection. MoonBirds has made known its intention to alter its NFT collection.

This enraged the collection’s existing owners while exciting non-holders who enjoyed the collection.

Called out by the Galaxy Digital survey

Yuga Labs and Moonbirds are two of the brands singled out because of the language in their licence that has deceived consumers.

According to Yuga Labs, “when you buy an NFT, you fully own the underlying Bored Ape, the Art.” However, in actuality, Yuga Labs continues to be the owner of the intellectual property.

Yuga Labs “implicitly admits that the NFT holder does not, in reality, own the work,” according to Galaxy Digital.

About the author

Murtuza Merchant is an avid follower of blockchain and cryptocurrencies.

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