LooksRare Team Cashes Out $30M in WETH, Faces Community Backlash
The price of the native token LOOKS tumbled by 15% after the news of the cash-out became public. Read the full article by Prashant Jha
We have yet to see anyone put up a fight against OpenSea for a share of the NFT market. LooksRare came on to the scene quickly and saw a lot of traffic that made people think that it could be the next big thing. Users started trying out the platform to benefit from the reduced trading fee in comparison to (2% compared to 2.5%) OpenSea as well as trading rewards to incentivize activity.
Rewards would be given out on a daily basis and dependent on the volume traded by the individual and the platform’s daily performance. There have been suggestions over the last few weeks that there has been a lot of wash trading being conducted on the LooksRare marketplace. Users were taking advantage of royalty-free projects, such as “meebits,” and trading them to another wallet they own to harvest LOOKS token rewards.
That may not be the platform’s fault but it is still not the best look. What is bad for LooksRare is that they can be seen, on etherscan, that they are withdrawing 10,500 wETH worth $30 million from staked tokens. To make matters worse they cashed out the tokens on Tornado Cash which scrambles and makes the transaction virtually untraceable. Since this was noticed the company has been getting hit hard on social media and the LOOKS token has since dropped 15%.
Looks Rare has since addressed the situation but that has not made people feel any better about the situation.
“Love that you address this like "we haven't been paid for 6 months." So each team member just cashed out over 3 million USD (for 6 months' work) leaving the public bag holders broke with a shitty chart like this? Joke.... community-driven lol. Another crypto sad joke tbh.” said a Twitter user.
This does not bode well for their OpenSea killer status that they have self-proclaimed. Paying the employees is one thing but why make it look shady by putting the transactions into a scrambler? It has still made a bit of a name for itself over the past few months but there are some red flags that have been coming up around it. Usually, where there is smoke there is fire, especially in the NFT market.
