Many of the takeaways from the FTX scandal are wrong.  Here's a personal list, in no particular order.  All of these are just my personal opinion based on public reporting. 🧵 1/24

One more disclaimer, I'm not going to repeatedly use the word "allegedly" throughout this thread, because it's tiresome, but please read each statement regarding FTX with the understanding that it is only based on public allegations. 2/24

False Takeaway 1.  This was a failing of crypto.  (In fact, it has little to do with crypto.) 3/24

Just a quick recap:  FTX embezzled customer funds to make directional bets via Alameda.  Why crypto?  In an interview he stated that it's because that's where the money is (for now), but that it could easily be equities or even sports betting in the future. 4/24

That's what I mean by it has very little to do with crypto itself.  Crooks go where the money is. 5/24

False Takeaway 2:  FTX lobbied aggressively on behalf of crypto.  (Actually, they lobbied against Crypto.) 6/24

The bill they were pushing (the DCCPA) sought to essentially eliminate decentralized exchanges, which would have been a huge windfall for centralized exchanges (like FTX). 7/24

I.e., the idea was, if they could shut down (or effectively shut down) DeFi, everyone would be forced to trade via sites like FTX, which would mean more client funds for them to "keep safe."  8/24

So yes, I'm asserting that decentralized exchanges are "crypto" in a way centralized exchanges are not.   They're not perfect, but they're much closer to embodying the "crypto" ideals of decentralization, permissionlessness, etc.  9/24

False Takeaway 3.  FTX was an elaborate PsyOp by governments to attack crypto.  (If you believe this sort of conspiracy, I'm not going to be able to convince you otherwise.)  10

False Takeaway 4.  Legislators are pushing for investigations of Social Media companies but not FTX.

(Actually, criminal investigations of FTX are already happening.) 11/24

https://twitter.com/elonmusk/status/1593624195136487426

Because of course they are. 12/24

https://twitter.com/BitcoinMagazine/status/1590713876198608902

Generally, law enforcement does not like to comment on ongoing investigations, so being haled before congress to say "yes there's an ongoing investigation that we can't comment on" does not particularly help the investigators or the legislators.  Both sides understand that. 13/24

False Takeaway 5.  This is a partisan issue.   (It isn't.) 14/24

There's a lot of reporting about Dems taking campaign donations from FTX.  There's much less about Republicans taking campaign donations from FTX.  15/24

Ryan Salame (SBF's "top lieutenant") donated approximately $24M to Republicans.  His PAC, spent another $12M on Republicans.  Democrats took more, with $13M from SBF personally, and another $23M from his PAC. 16/24

The U.S. system of campaign contributions and limitless spending via PACs is undoubtedly a mess (and should be reformed), but this doesn't particularly reflect on one party or the other. 17/24

False Takeaway 6:  This is the end of crypto.

Amazingly, this take is exceedingly rare this time!  (By contrast, it was all the rage during previous crypto winters.) 18/24

It's actually hard to come up with anything more bullish for crypto (long-term) than the fact that this take isn't getting any traction this time around.  Instead we're getting "this will be a cold crypto winter" stories, which, yeah, maybe so. 19/24
https://www.coindesk.com/markets/2022/11/16/coinbase-ftxs-collapse-will-likely-lead-to-an-extended-crypto-winter/

Let's do a quick rapid fire round of takeaways: 20/24

The whole "Ukraine-money-laundering-to-Dems" conspiracy theory is nonsense.  It's a transparent attempt to spin the story into a basis to oppose support for Ukraine. 21/24

Attempts to rope SBF's parents into this are similarly nonsense, at least until anyone has any evidence to the contrary.    This seems driven by the politics of certain circles looking for excuses to convert this into an attack on liberal professors. 22/24

New York Times comes out of this looking bad.  Writing puff pieces on SBF at a time when all the wrongdoing came to light. 23/24

Anyway, that's all I got.  I'm sure plenty of people disagree with me on much of this, just thought I'd share my perspective. 24/24

Judge Cannon just issued her order on FPOTUS Trump's request for a special master.  There's one detail of the order I wanted to share a few thoughts on--the idea that the special master will review for, among other executive privilege.  An absurd can of worms has been opened.🧵

First, a quick primer on executive privilege, because it bears reminding.  The first paragraph of Wikipedia on it is sufficient to get the idea across. /2

The idea here is that the executive branch gets to assert executive privilege (sometimes but not always) to resist subpoenas as a means of preventing interference with governmental functions.  Now back to Trump... /3

Trump is asserting (and Judge Cannon is upholding the idea by permitting a special master to review for it) that Trump may assert this privilege *against* the DOJ, an agency of the executive branch.  Let's make a few observations about why this is problematic: /4

First, and most obviously, Trump is not the president of the U.S.  The reasoning of the executive privilege (i.e., to avoid interference with governmental functions) makes little sense when asserted by a private citizen. /5

Second, and almost as obviously, the DOJ *is* an agency of the executive branch.  Again, a doctrine intended to promote the operation of the executive branch utilized to stop the executive branch from performing its function is nonsensical. /6

But there's a third and less obvious practical problem with having a special master "review documents for executive privilege" in this case:  what exactly would they be looking for?  What, even theoretically, would qualify? /7

Analogy:  The government claims that squares have four sides.  Plaintiff claims that there may be some five-sided squares and requests a special master to review 10,000 shapes and evaluate if any of them are five-sided squares. /8

Necessarily, any determination by a special master that a particular document is subject to executive privilege (in the face of the current president not asserting executive privilege) is the creation of new law.  A new doctrine. /9

It should go without saying that a special master is ill-equipped to invent a new "former president" privilege.  Special master's have no authority to create law. /10

A special master is just an outside expert to assist the Court.  There are no experts on the assertion of executive privilege by private citizens.  Just like there are no five-sided square experts. /11

Executive Privilege for Private Citizens

I keep reading legal analyses of whether an NFT is a security that begin and end with the Howey Test.  The Howey Test is an important piece of the puzzle, but it's not the big picture.  

A "not-your-lawyer" and "not legal advice" thread🧵

2/ Quick refresher first.  The typical and historical way of analyzing whether something is a "security" in the US is something called the Howey Test, a four-prong test that comes from a 1946 case involving sale of citrus groves.  SEC v. Howey, 328 U.S. 293 (1946)

3/  For your reference here's an articulation of the four prongs of the test:
1.  An investment of money
2.  In a common enterprise
3.  With the expectation of profit
4.  To be derived from the efforts of others

4/  I'm not going to spend a good deal of time here attempting to apply that test to various NFT projects, except to say, prongs 3 and 4 are the wobblers with respect to NFTs.

5/  In other words, one response to these analyses is to question "is there really a reasonable expectation of profit?  Is that profit derived from the efforts of others?  etc."  Those are harder questions than many of these analyses give them credit for being, BUT..

6/  Whether or not an NFT sale satisfies the Howey test isn't the end of the story.  That's just the start of the story.  Consider for a moment more broadly where we're at with potential regulation of NFTs as securities.

7/  First recall that sale of securities is not per se illegal.  It's sale of "unregistered" securities.  The problem is that the registration requirements are not very workable (and potentially impossible-to-comply-with) when applied to NFTs.

8/  Just as an example, if it's possible to mint an NFT directly from the contract, how would a project comply with the requirement to deliver a prospectus to everyone who mints?

9/  More broadly, if an entire sector is unable to comply with the registration requirements and (lets assume for the sake of argument) is a security under the Howey Test, is the logical conclusion that the entire sector is unlawful?  More importantly, will prosecutions follow?

10/  We may disagree on the answer to that question, but in any event, I don't think the answer is "obvious."

11/  Let's back up for a moment again and remember that the SEC is a semi-independent administrative agency.  It's not a co-equal branch of government, it answers to the executive, i.e., POTUS.  

12/  In March, POTUS signed an executive order that essentially sought guidance from various stakeholders on how to proceed.  "The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier..."

13/  If you're, say, the chair of the SEC, you don't make these decisions in a vacuum.  You've been given the guidance to take a holistic approach to crypto, balancing consumer safety with the need for innovation. 

14/  (And if you're the current chair of the SEC, you draw on some fairly deep understanding of crypto from your experience teaching an excellent course on the subject at MIT.)
https://www.youtube.com/watch?v=EH6vE97qIP4

15/  You might also look to what is happening at the state level.  For example, just this week, California's governor passed an executive order intended to spur responsible web3 innovation.
https://www.gov.ca.gov/2022/05/04/governor-newsom-signs-blockchain-executive-order-to-spur-responsible-web3-innovation-grow-jobs-and-protect-consumers/

16/  I can hear the doubters on that last point, demanding I point out that federal law trumps state law here (Supremacy clause much?), but stay with me, because again, that's only part of the story.

17/  Let's talk about marijuana.  It provides a useful analogy.  Apologies if that conversational switch felt like whiplash.  I promise I'll tie it together.

18/  If someone opens up a marijuana dispensary in California, are they breaking the law?  Marijuana is a Schedule I substance under the Controlled Substances Act.  That's federal law (like the Howey Test), even if a somewhat dated law (like the Howey Test).

19/  What about the fact that California legalized marijuana under its state constitution?  Sorry but the U.S. Drug Enforcement Activity is a federal agency (like the SEC) and we have that Supremacy clause again (i.e., federal law trumps).

20/  But if a legal analysis of a California marijuana dispensary began and ended with the controlled substances act (the federal law) and the DEA (the federal agency), it is woefully incomplete.

21/ Because what someone opening a dispensary really wants to know is not whether what they're doing is illegal in a technical and abstract way.  They want to know, "will this be prosecuted?"  The same is true with respect to the SEC and NFTs.

22/  With the dispensaries, just like with NFTs, yes, prosecutions are possible, but it's highly relevant that congress is examining the issue and considering reclassification of marijuana, just like congress is looking at how to approach crypto:
https://www.congress.gov/bill/117th-congress/house-bill/365

23/  With the dispensaries, just like with NFTs, many states are planting their feet in the ground. Even if the feds *could* win those fights, that doesn't mean they want the hassle, particularly if it's against the wishes of the executive they answer to.

24/  With the dispensaries, just like with NFTs, the federal agencies appear to be going slowly, cautiously, and waiting to see what happens before committing to a legal interpretation that puts them at odds potentially with congress, POTUS, and State governments.

25/  With the dispensaries (and maybe soon with NFTs?  Pretty please?), the affected industries are developing their lobbying arm.  As that keeps up, expect more politicians to push for friendlier regulation. Remember, Congressional statutes trump administrative regulations.

26/  At the end of the day, it doesn't mean much to say "Huzzah!  what you're doing is technically illegal, based on my pedantic interpretation of dated federal law, interpreted in a vacuum!"  

27/  Imagine the lawyer at a supermarket in Connecticut, "It is technically illegal for you to sell this pickle because it doesn't bounce one foot when dropped." Technically true, but perfectly reasonable for the supermarket employee to ignore the weirdo.

Howey Test

Let's talk sales charts, average prices, NFT Mints, and why they make me bullish on @punkscape.  Not financial advice. Also not impartial thoughts--I'm a dev on the project.  Anyway, a thread 🧵.

2/ Here's the "all time" secondary sales chart for @punkscape.  This is, IMO, a pretty unusual chart for an NFT project, in some ways good and in some ways bad.  I'll talk about both, but first...

3/  Here's a chart of another project (not @punkscape) that I consider much more typical for an NFT project.  Why more typical?    The high point (price-wise) was right after mint.  Typically, the higher the initial pump, the longer the tail.

4/  So back to the @punkscape chart.  I mentioned there are some good things and some bad.  Let's start with a bad:  at mint, the scapes pumped to a little over .2 average.  That's great for a .03 mint (a 6x!), but let's be honest, people in NFTs hope for more.

5/ But the flip side of that coin, and another unusual detail about the @punkscape chart to stress, is that now, seven months later, scapes are trading near their initial "pump" price.  Here's the last 30 days chart:

6/ It is, in other words, unusual to see an NFT project that never broke, say, a 1ETH floor (or really a quarter of that), hold the line near its all time high, seven months in.

7/  Let's zoom in further.  In the last week, scapes have done approximately 80 ETH in secondary volume.  According to rarity.tools, that puts them somewhere in the 50 to 60 rank of NFT projects.

8/ So think about the top 100 NFT collections by volume for any given week.  Filter out any projects that have ever broken a .3 floor--that gets rid of the "already pumped" success stories.

9/  Now filter out any projects that launched within the last month.  (Remember, so many NFTs peak near launch.)  Whose left?  @punkscape.  Are there any others at all that fit this category?

10/  So what's my point?  Often NFT collectors aim for the shiniest new thing.  (And with good reason!  If you got into @moonbirds_xyz mint this last week, congrats!)  But collectors, by nature, look for hidden gems too.  

11/  I don't think anyone would disagree with the statement that a significant factor in the value of an NFT is its history, provenance, "OG" status, etc.  That's something the right-click crowd fails to grasp.  NFTs are collectibles largely BECAUSE of their provenance.

12/  All that said.  I haven't touched on "why" @punkscape has the unusual chart that it does.  Why, in other words and in my opinion, scapes are an interesting play substantively.

13/  Plenty of other threads on that topic, so I'm not going to do that here, except to say, it's often the case when a new NFT mints, the associated team promises to keep developing, keep pushing, and keep building, with a roadmap stretching out into the distant future.

14/  Less often the case:  getting to point to 7 months of *past* development, building, etc.  Here's a bit of a @punkscape history thread for those unfamiliar.
https://twitter.com/hearsay_law/status/1504863986738638850 

15/  And here's a promise, since I can't and won't do price promises:  we'll keep building.  (And, in fact, we're looking at ways to ramp up building. 👀)  If you want to know a little more about what's in the works, join the discord and say hi. discord.gg/SxHAzDnasa

Unusual Scape Charts

1/ Thought it's worth taking a moment to focus on a particular detail about the @punkscape Chapter II launch and a consideration for the NFT space in general.  A short thread.  🧵
https://twitter.com/PunkScape/status/1505222054823358468

2/ When a project is developing additional features, artwork, etc., one logical way to release it is to treat the old NFTs as "whitelist" tokens and allow existing holders to get in early on the next thing from the project.

3/ That's certainly one way to do a release and it's not without some advantages and merit.  There's an obvious immediate benefit that it raises more money for the project.

4/ If the new work is valuable, there's obviously value to having early access to it.  But it's always something of an open question who's getting the better end of the deal, the project or the holders.

5/ In the same vein, sometimes projects are released where holding the previous mint operates as a "discount" on the new mint.  This raises similar issues.  

6/ By analogy, when a store sells you something where the "benefit" of the product is, "it allows you to more easily spend at our store," it's reasonable to ask the question whether that's truly a benefit to the customers or simply to the store.

7/ I make no claim to be a purist on this issue, incidentally.  There's definitely a place for white lists, early access passes, discounts, etc.  I simply think it's reasonable for holders to consider these issues and to challenge assumptions that these are always "benefits."

8/ I'm also, of course, shamelessly tooting our own horn.  Maybe we're crazy to release Chapter II as a free update, rather than a "PunkScape v2 mint."  In my mind, it's the good kind of crazy though.  A crazy that comes from this really being a project of love.

A free update, not a new mint.

As we near the start of @punkscape Chapter II (launching Monday, March 21!), I thought it might be a good time to take a trip down memory lane.  Let's remember where this project has been.  Here comes a long thread🧵.

Prologue: July 30, 2021, @jalil_eth announces a collection of landscapes.
https://twitter.com/jalil_eth/status/1421099405160030208 

Much of the development focuses on fair launch mechanics, including various on-chain features to prevent abuse, which were then made publicly available.  (Hint hint NFT community: the problems identified are still issues with many new NFT launches.)
 https://twitter.com/jalil_eth/status/1426979195696021504

September 4, 2021: Jalil releases "One Day Punks" (ODPs) a free mint to function as an early access pass to the PunkScapes.  Due to the "one per wallet" limitation, the collection sets a new record for most unique wallets to an NFT project (10k).
https://opensea.io/collection/onedaypunks

September 9, 2021: PunkScape announces its first Hackathon to create an open source package for analyzing NFT rarity.  Several of the entries are used by various NFT projects today!  (Punkscape would later be added to rarity.tools as well.)
https://twitter.com/PunkScape/status/1435929505500119043

The idea of "Banners" rather than just PFPs starts to spread.
https://twitter.com/hearsay_law/status/1437586310143696897 

September 25, 2021: CHAPTER I
The first @punkscape is minted.  Appropriately (and coincidentally), it's #1881, a rocket waiting to launch.  (Why #1881 and not #1?  Remember those fair launch mechanics?  These are on-chain random shuffled.)
https://opensea.io/assets/0x51ae5e2533854495f6c587865af64119db8f59b4/1881

September 25 is a day of firsts.  The seminal banner collection mints.  Although landscape-orientation NFTs existed, of course, there had never been a 10,000 generative collection of banners.

The metadata for each Scape (at launch) included a unique date, with the earliest date February 2, 2022.  More on that below...
https://twitter.com/hearsay_law/status/1442671178481504260

October 3, 2021: Scapes mint out.  
https://twitter.com/PunkScape/status/1444692516595539969

The @punkscape community begins obsessing over an unintended feature:  the diptych meta.  Two scapes that align end-to-end.  (Or a triptych, or a quadtych, etc.)
https://twitter.com/PunkScape/status/1445146849086689285

October 15, 2021:  First version of the ENS domains profiles.  (There's lots more coming with this feature.)
https://twitter.com/PunkScape/status/1449113552409841667


November 10, 2021:  @punkscape sponsors and gives out 5 ETH in prizes for derivative art.  Some of these look truly amazing.  https://twitter.com/PunkScape/status/1458604030721249282

And PunkScapes begin to appear in the wild...
https://twitter.com/Zinnlos/status/1464697099652636680

December 9, 2021: The @punkscape website gets its first major redesign, changing from a place focused on the mint to a focus on the various initiatives under development under a growing team.
https://twitter.com/PunkScape/status/1468969752072650759

December 13, 2021:  The beginning of a punkscape tradition to live stream coding sessions (either on discord or on twitch).
https://twitter.com/PunkScape/status/1470429388567199751

December 14, 2021:  Launch of a "builder" tool, to allow anyone to place PFP NFTs onto punkscape banners (rotating them, scaling them, etc.), along with stickers.  More to come on this feature.
https://twitter.com/PunkScape/status/1470922938983534594

December 16, 2021:  PunkScape hits 1000 ETH in secondary sales volume.
https://twitter.com/PunkScape/status/1471750590652989441

December 17, 2021:  Some big names start to rock PunkScape banners as their twitter banner.  Folks like shopify CEO @tobi.
https://twitter.com/PunkScape/status/1472000117011931136

The diptych meta continues to grow, as do tools to support it...
https://twitter.com/PunkScape/status/1474379366855417858

January 1, 2022: Year of the banner announced.  By this point multiple banner projects have popped up and the community of believers in "the banner space" grows.
https://twitter.com/PunkScape/status/1477239438551904256

January 20, 2022: PunkScape rebrands to its pixel roots.  (And, as a side effect, teams Pink and Blue form in the discord for fun and games.)
https://twitter.com/PunkScape/status/1484347799244185609

February 2, 2022:  Punkscape launches Gallery 27, home of the Twenty Seven Year Scape collection, an experiment in AI-generated art auctions, with royalties to scape holders.
https://twitter.com/timberpeakcap/status/1488948450926465024

The first twenty seven year scape (27YS) auctions off for 8.55 ETH, with 4.275 eth paid to the @punkscape holder on which it was based (just for owning a PunkScape).  These auctions continue every day since (and for the next 27 years).
https://punkscape.xyz/gallery27/1

February 9, 2022:  PunkScape asks for some community lore about Soul Planets (for a soul planet giveaway sponsored by @SayWen_eth) and gets some incredible submissions, like spoken word by poet @bouncebackon1.  (Go check out the movie about him!)
https://twitter.com/BounceBackOn1/status/1491579120727199746

February 25, 2022:  UFOs arrive in the scapeverse, replacing a trait from a long time ago in a galaxy far, far away.
https://twitter.com/PunkScape/status/1497262439846629379

March 1, 2022:  Punkscape launches NFPeace, a system to allow any holder to donate any NFT for auction with all the proceeds going directly to support Ukraine.  All verifiable on-chain.  https://twitter.com/PunkScape/status/1498658224521707522

And that brings us to the final pages of Chapter 1!  Chapter II begins March 21, 2022:  an update that takes every @punkscape holder (for free!) from static images to interactive engines, playable right within opensea.  There's a ton to explore.
https://twitter.com/PunkScape/status/1500146293360021508

Come join our discord to celebrate the launch of Chapter II at 12PM PST on Monday!  (As usual, we'll be playing some pink versus blue trivia.)
https://twitter.com/hearsay_law/status/1503561137106825216 

What is an NFT project anyway?  Specifically, what is the entity that creates and manages an NFT.  I spend a good deal of time thinking about this question and I believe it to be a more complex question than it appears. 🧵

First, let's get out of the way that I'm not asking what is an "NFT Project" from a legal standpoint.  In other words, I'm not asking the question, "Is it a limited liability company?  A DAO?"  I'm asking something a little more abstract.

When industries mature, titles and responsibilities become more formalized.  In the film industry for example, we have a reasonable idea what the responsibilities are of a "2nd Assistant Director" (and even a 2nd 2nd AD).

It's not just about titles, but also about how to organize workflow.  Is it more like a like a film?  More like a video game?  More like a fashion line?

I find with @punkscape, we have the experience of "borrowing" from various industries to organize our flow.  For example, we have a music director on our team, @bxb______, who also functions as a corporate secretary (e.g., keeping the minutes).

Another example, we took on beta testers ("Testooors") in preparation for the launch of @punkscape Chapter II.  This feels very much like something a video game would do, but I haven't heard many examples of other NFT projects using beta testers.

TANGENT: Because I can't mention the beta testers without saying it:  They've been a world of helpful.  Would strongly recommend any project on the fence about the idea of opening up testing to their community: do it!  It's great.  (Thank you Testooors!!!)

I suspect I'm not alone among NFT projects feeling like the "job titles, job descriptions, responsibilities, and the like" are something  of a "make them up as you go" situation.  It's a sign you're working in a new industry.

I see now that this thread didn't have much of a point, so I'll just leave you with some parting wisdom from Caddyshack: "A flute with no holes is not a flute, but a donut with no hole, is a danish."

What is an NFT project?

Before an idea "clicks" it can look deceptively small.  Let's talk about @punkscape : Chapter II (launching March 21) and the future.🧵

As we know, an NFT can be tied to many things.  Even a simple static image takes on significance and value when its ownership is tokenized.  Suddenly it can function as a building block, a key, a membership, a brand, a share, a piece of history... NFT collectors get this.

For @punkscape, the change from Chapter I to Chapter II looks small at first too.  Instead of static images, you have dynamic interactive landscapes.  Not an image, or even an animation, but an engine.  Code.

So what does code have over, say, an animation?  Well to take a small proof-of-concept feature, a Chapter II @punkscape celebrates its sale with fireworks.  The scape "knows" it's been transferred.

I'm not suggesting pixel fireworks are the end all (though I do like them), but if you take a moment to think about how that feature happens, you may come around to believing (as I do) that the implications are big.

What is possible in a banner when it is code talking to the blockchain? Over the last five months we've spent a lot of time talking about answers to that question (this isn't a spoiler thread). The starting point is getting every holder their own pocketsize connected @punkscape.

After that it becomes about showing people what can be done with it.  (There is no shortage of ideas.)  Maybe it's worth reconsidering what the "metaverse" really means and how it will arrive.

Sure, the metaverse is going to be, in part, fancy headsets, augmented reality hardware, billion dollar mega-infrustructure, and the race to design the connected platform of everything.

But maybe the metaverse is also going to be about small pixel-art interactive banners at the top of blogs, social networks, and other legacy protocols. Maybe it arrives quietly.

And maybe one day I'll be closing these threads with "while you're here, feel free to take a block fruit from the tree in my banner.  I've set the @punkscape to public."  For now, peace and love.

Punkscape Chapter II launch thoughts.

Recently, @CryptoMories was delisted from OpenSea after a DMCA takedown notice.  @PunkScape also recently made a change to a trait due to IP concerns.  Some thoughts on intellectual property and NFTs: 🧵

The way a DMCA notice works, once a website receives it (in this case OS), they have to make a decision whether to take down the material or not.  If they choose the latter, they open themselves up for potential secondary liability for assisting with copyright infringement.

As a practical matter, this means entities often simply comply and take down the potentially infringing material.  Ask a lawyer to choose between potential liability for their client and no potential liability for their client, and guess which they'll tend to pick.

In the NFT space, delisting from OpenSea, while not a death sentence to a project, is often a catastrophic blow.  The marketplaces for NFTs are not particularly decentralized--though that's changing, with the arrival of alternative marketplaces like @LooksRareNFT,@the_x2y2, etc.

With respect to @cryptomories, I don't know the details as to who sent the takedown notice, and I'm not going to comment on who is in the right, legally, with respect to the particular claim.  I simply don't have enough information to form an opinion.

But NFT creators should understand when they reference copywritten work they assume a major risk.  Same goes for buyers of NFTs when buying into a project with assets that incorporate copywritten material.

If your gut response is, "everybody does it," keep in mind that's not a legal defense.

If this dynamic makes you upset, I would suggest that your beef is not with whoever sent a DMCA, nor is it with @opensea, it's really with our legal framework around copyright law.

On that topic, incidentally, I highly recommend the esteemed Professor Lawrence Lessig.  He's amazing. (14-year-old video, but still timely.)
https://www.youtube.com/watch?v=7Q25-S7jzgs

So what can you do if you're an NFT project that has elements that potentially put you at risk?  We recently went through this with @PunkScape and I wanted to share some lessons from that experience:
https://twitter.com/hearsay_law/status/1497262866428096513

The first and most important thing you can do is start planning for it.  In our case, we had the benefit of the decision to delay locking the metadata.  And I get it, locking metadata is appealing.  People want their NFTs "immutable."

But people also want their NFTs freely tradable on the major marketplaces.  Take your time with the decision to lock the metadata.  Giving yourself a window to address potential issues benefits the project.

The second and even more "most important" thing you can do is communicate the situation with your holders and what you intend to do about it.  Planning ahead means you have more opportunity on the "what you intend to do" front and aren't blindsided by a DMCA notice.

At @PunkScape, for example, we wanted to replace the potentially infringing material with something we believe in (we went with UFOs) and we wanted the rarity scores of the collection to be identical to before the change.

Planning ahead meant we had time to consider and iterate on various options for replacement art.  We were, nonetheless, nervous how the community would react to the change.

Here's another tip from a policy we implemented:  we allow our team members to buy and sell Scapes. We believe it aligns interests.  But we made an exception for this particular trait during the window when we had knowledge a change was coming that the community didn't yet know.

In other words, we issued a moratorium (in the interests of fairness) on trading of what would become UFOs by team members until the information was made public to the community.

In any event, The response from the community was an outpouring of understanding.  I already loved the @punkscape community, but moments like these really warm my heart. 😍  I think the key "most important" lesson here is be honest, open, and transparent with your community.

If the market is an indicator, as of this writing, there are only five UFOs listed for sale on OpenSea (in a 10k collection): 
https://opensea.io/assets/punkscapes?search[sortAscending]=true&search[sortBy]=PRICE&search[stringTraits][0][name]=Rocketry&search[stringTraits][0][values][0]=UFO&search[toggles][0]=BUY_NOW

So I'll just conclude with the "most important" takeaway from all this, which I haven't shared yet.  (Okay, I've beat that joke into the ground at this point.)  Peace and love.

You can read the unrolled version of this thread here: https://typefully.com/hearsay_law/CgYEVxD