Opinion

Is Jeff Koons as Passionate About Uniqlo as He Sounds? Why Is This Unicorn Named After Picasso? + Other Questions I Have About the Week’s Art News


Curiosities is a column where I comment on the art news of the week, sometimes about stories that were too small or strange to make the cut, sometimes just thoughts on the circus.

Below, some questions posed by the events of the last week…

 

1) What Is Pacaso?

The logo of property co-ownership sales and management platform Pacaso on a smartphone screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

The logo of property co-ownership sales and management platform Pacaso. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

Founded only last year, Pacaso is, I’m told, the youngest start-up ever to reach “unicorn” status—a valuation of more than $1 billion. A glorified time-share scheme that promises to “democratize second home-ownership,” its mission is to finally let America’s wealthier enclaves know the joys of having your neighborhood become an Airbnb hotspot by selling fractionalized stakes in mansions in places like Napa Valley.

Since you are reading an art site, you are probably already wondering, “Is the name inspired by… you know…” The answer is yes. And the answer to your follow-up question—”does Pacaso’s innovative model of fractional real-estate investment carry on the legacy of Cubism?”—is also yes.

From the company’s Our Story page:

We are inspired by Pablo Picasso’s revolutionary thinking, the way he challenged norms in early 20th century art. He is credited with co-creating Cubism, which brings together individual elements to create a new and innovative whole. That resonated with how we’re approaching second home ownership. We decided on Pacaso to honor Picasso’s legacy of innovation.

And, truly, what an honor it is! Per Planet Money, “No Pacaso” signs are quickly becoming a hot accessory in the nation’s tonier areas. Some poor sap who bought 1/8th of a $4 million mansion recounts showing up for his slot at his new vacation home—which had been dubbed the “Chardonnay” house by Pacaso, and is described as having “a distinctly modern and high-tech feel”—only to be greeted by a sign that read, “The Pacaso House Is the Big One on the Right With No Soul.”

 

2) What’s Jasper Johns’s Flag Got to Do With Jurassic Park?

Installation view of the "Jasper Johns and the Whitney" in "Jasper Johns: Mind/Mirror" at the Whitney. Photo by Ben Davis.

Installation view of the “Jasper Johns and the Whitney” in “Jasper Johns: Mind/Mirror” at the Whitney. Photo by Ben Davis.

Here’s a bit of trivia I didn’t know until I went to the “Jasper Johns and the Whitney” room of the New York museum’s big Jasper Johns show. Just after Michael Crichton wrote and directed the original Westworld in 1973—but long before he wrote Disclosure, created ER, or became one of the world’s most high-profile climate-change deniers—he had a side hustle writing art catalogues. Specifically, the catalogue for Jasper Johns’s 1977 Whitney retrospective.

Let me tell you the story. Johns wanted someone to write about him who was “not an art critic.” By his own admission, Crichton had never read an art catalogue. Asking around, he couldn’t find anyone who had ever actually read a catalogue either, and decided that what people wanted was facts about the artist and the works—“none of that art interpretation stuff.”

Copy of the 1977 catalogue for Jasper Johns's Whitney show, on display at the Whitney. Photo by Ben Davis.

Copy of the 1977 catalogue for Jasper Johns’s Whitney show, on display at the Whitney. Photo by Ben Davis.

Honestly, this is not bad advice! I hate it when you open a catalogue looking some helpful historical context instead get 30 pages of musings on Giles Deleuze or Fred Moten.

Despite this “just the facts” approach, Crichton’s catalogue contains a pretty fun account of a car trip he took with Johns where the artist resolutely refuses to offer directions to get where they are going:

Once I drove him from his house at Stony Point into New York City. We were going to some destination I did not know. I asked him how to get there. “Well, I’m not sure, I’ll know when I see it, as we go.”

We drove for a while longer, crossing the George Washington Bridge. I asked again. “Well, I don’t know. Turn right here, and we’ll figure out the rest later.”

I love how closely the description of a Jasper Johns outing follows his well-known art-making mantra: “Take an object / Do something to it / Do something else to it [Repeat].” Or, as Crichton narrates Johns’s thought process, “We are going down this street now, and when we get to the end, we will decide which way to turn, and having decided that, we will wait until it is time to make another decision.”

Jasper Johns: important painter; demanding road trip companion.

Crichton accepted a small painting from Johns in lieu of payment, and according to author Don Thompson, he later turned down $5 million for it from Larry Gagosian. For that reason, the 1977 Whitney Museum catalogue is sometimes regarded as the most lucrative piece of art writing ever done.

 

3) Is the Male Gaze in the NFT World Really Going to Be Decentered by Playboy?

Playboy has enthusiastically gotten into the NFT game. On the one hand, it is looking to sell its back catalogue of vintage cheesecake as NFTs; on the other, it is out to smash the patriarchy.

Specifically, the magazine has partnered with the Sevens Foundation on a new NFT commission (open to applicants through October 1!) called “The Art of Gender and Sexuality.” The initiative, we read, recognizes that “the fight for equality and representation that continues to define the art world at large is particularly urgent in the fast-moving world of NFTs, a primarily cis-male dominated space.”

I would make a joke here about how “I support Playboy for its social justice mission to decenter the digital art world” is the new “I read Playboy for the articles,” but, you know, Playboy did publish some pretty good articles.

 

4) Will Koons’s Uniqlo Line Redefine Basic Fashion?

“Sophisticated pop artworks by one of the greatest contemporary artists, Jeff Koons!” boasts the website of Uniqlo, the fast-fashion juggernaut from Japan that has just launched a Koons capsule collection in coordination with the soon-to-open “Jeff Koons: Lost in America” show in Qatar.

The exclamation point certainly proves they are excited—but what’s so “sophisticated” about these works?

Craft, craft, it’s all about craft, according to the interview with Koons on the project’s micro-site (which also features interviews with curators Massimiliano Gioni, Elena Geuna, and Yuko Hasegawa). We’re talking here about the craft of… printing pictures of Balloon Dog and Rabbit onto basic cotton Ts and hoodies.

Here’s Koons waxing Koonsian about the globe-spanning merch collab in a series of words that sound as if they have been put into Google translate from English to a foreign language and back again (but he speaks with such conviction!):

I enjoy very much how Uniqlo is in contact with my generation but also a younger generation and it really communicates across cultures and everybody enjoys very much their clothing. We are just people who are seeking to be connected with each other. By working with Uniqlo, making a T-shirt that can be connected and communicate to somebody else that I care about them—I embrace that opportunity.

Of the collection’s various options, my favorite has to be the Jeff Koons sweatshirt featuring his work Play-doh (1994–2014). Not exactly pushing the boundaries of graphic design, as far as I can tell, it offers the giant words “JEFF KOONS” next to an image of sculpture.

I assure you that as a work of art, the massive, precision-designed Play-doh actually is impressive and huge and detailed in its craftsmanship. But rather than seamlessly “communicating across cultures,” when its image is printed without scale on a shirt, like nothing so much a sturdy pile of rainbow doggy-doo (maybe from Flower Puppy).

Screenshot of Jeff Koons x Uniqlo sweatshirt featuring Play-doh.

Screenshot of Jeff Koons x Uniqlo sweatshirt featuring Play-doh on the Uniqlo website.

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Is a Bored Ape Tattoo the Ultimate Flex? Since When Is Uranium in a Museum Not OK? + More Questions I Have About the Week’s Art News


Curiosities is a column where I preserve for posterity the “you can’t make this up” parts of the art news.

Below, some questions posed by the events of the last week…

 

1) When Will This Outbreak of Bored Ape Fever Peak?

I am really trying to not make this an NFT news column, but here we are, with the news of the week being Sotheby’s two-lot, $26.2 million online sale of 101 Bored Ape Yacht Club NFTs (or: pictures of apes dressed like people) and 101 associated Bored Ape Kennel Club NFTs (or: pictures of dogs).

A collage of the Bored Apes offered up in Sotheby’s “Ape In!” sale this week. Courtesy of Sotheby's.

A collage of the Bored Apes offered up in Sotheby’s “Ape In!” sale this week. Courtesy of Sotheby’s.

The 277-year-old auction house referred to the sale as “a testament to the enthusiasm and the strength of the close-knit BAYC [Bored Ape Yacht Club] community.” We are talking about a community whose roots run deep—all the way back to April 2021, making it a venerable classic, with the same deep place in the cultural mind as the Justin Bieber song “Peaches” or the bad new “Mortal Kombat” remake.

Amy Castor has written a great explainer on the Bored Apes, whose most high-profile collectors include Jermaine Dupri and AriZona Iced Tea. I was curious about this “close-knit BAYC community,” so I looked around the internet, and I can assure you that the 5,000-plus shrewdness of Bored Ape collectors (a group of apes is called a “shrewdness”!) is indeed strong and deep. Observing them egg one another on via Twitter has a bit of the vibe of watching a cocaine-fueled game of Truth or Dare at a meet-up of Adult Swim fans.

At this point, everyone wants a piece of the Bored Ape heat, and the hype is producing some very weird mutations. Perhaps the best thing I found in my casual investigation was this Bored Ape tribute rap from Raleigh, North Carolina–based ExtraGramKen.

It’s worth the price of admission for this great verse paying homage to the randomly assigned drip of the Apes alone:

Rainbow, ooh, that’s rare

I love the one that’s rocking the gold hair

Laser eyes, better watch where you stare

So many clothes, my ape don’t know what to wear

Thus far, however, the Bored Ape anthem to beat is probably Bored Ape Rave Club, by mid-tier Dutch electronic act the Bassjackers. They’ve been cranking it every chance they get. Here they are at an outdoor venue in Ford Lauderdale last month.

According to the New Yorker, part of the appeal of the Bored Ape Yacht Club is that members feel like they are getting in on the ground floor of some great new IP that could launch a media empire like Disney. Whether these blank-faced, randomly bedecked simian avatars are the next Mickey Mouse and Donald Duck or the next 12 Oz. Mouse and Drinky Crow remains to be seen.

At least one aspiring webtoon serial, “Yawn of the Apes,” is making the case for BAYC as a vehicle for internet comedy, promising exciting appearances by “apes owned by top influencers in the NFT space (j1mmy.eth, Ronin The Collector, Pranksy) as well as cameos from your everyday NFTer.” Episode 2, “The Ape Factor,” dropped recently, and stars Ape #1092 screeching its way through a BAYC-themed singing show, giving ExtraGramKen and the Bassjackers a run for their money. It has the slightly desperate dada vibe of a lot of internet humor—but, you know, it’s not the worst thing I’ve seen (and it’s an improvement from the first “apisode”).

But perhaps the truest measure of the scene’s frothing enthusiasm is the rash of BAYC fans declaring their undying love for the five-month-old NFT initiative by getting inked with Bored Ape Yacht Club tattoos. I would go so far as to say that the bar has been raised: you are not a true Bored Ape stan unless you have made the definitive crossover from digital to IRL by permanently branding a Bored Ape somewhere visible on your body.

One collector known as @half_ape, who describes herself as a 26-year-old mother of two, posted on September 11, “I want to fill my arm with my favorite NFTs so when people ask, I can explain what an NFT is! And also because I want all this awesome art on my body.” She then showed off her fresh Ape ink.

If you are reading this and thinking that there is something slightly… cultish about the whole thing, well, after @half_ape posted a second image yesterday of her tattoo to prove it was permanent, a chorus of largely delighted BAYC fans took gleeful note of the assault rifle casually posed in the background.

So, I guess what I am saying is: Do not mess with the Bored Ape community. All hail our ape overlords.

 

2. What Could Go Wrong with a Museum Show Devoted to Deadly Toys? 

The promo for the Napa Museum's "Dangerous Toys" show.

The promo for the Napa Museum’s “Dangerous Toys” show.

In Yountville, California, the Napa Valley Museum is scheduled open “Dangerous Games: Treacherous Toys We Loved As Kids” at the end of this month, billing it as “the original exhibition devoted to the wacky, whammo, wonderful world of the Slip ‘N Slide, Lawn Darts, Creepy Crawlers, Clackers, and other tantalizingly toxic toys.”

In an exuberant initial press blast, the show boasted that it would highlight the 1950s-era Gilbert U-238 Atomic Energy Lab, which sought to inspire children toward careers in the burgeoning field of atomic science. The kit offered samples of actual uranium ore for children to experiment with, as well as beta-alpha, beta, and gamma radiation sources, and a Geiger counter, among other instruments.

A warning on the original U-238 set cautioned potential lil’ nuclear scientists: “Users should not take ore samples out of their jars, for they tend to flake and crumble and you would run the risk of having radioactive ore spread out in your laboratory.” Teasing the show, Napa Valley executive director Laura Rafaty was reported to joke that “to be on the safe side… the museum may have the Napa Bomb Squad visit.”

Alas, the promise of exploring potential irradiation was not the light-hearted draw everyone had hoped. The museum soon issued a corrected press release labeled “OOPS! CLARIFICATION,” stressing, with undimmed enthusiasm, “There are no dangerous chemicals in the exhibit and we’ll let you know if we have to call the bomb squad!” Still, the show has already done its work of hearkening back to a simpler time, when exposing your child to uranium was considered excellent parenting.

 

3) What Is Going on In VR Machu Picchu?

Screenshot of promotional blast for Machu Picchu VR experience.

Screenshot of promotional blast for Machu Picchu VR experience.

Via a press teaser for the big “Machu Picchu and the Golden Empires of Peru” show, opening October 16 at the Boca Raton Museum of Art, we get a promise of the “First-Ever Virtual Reality Experience of the Mythical Fortress in the Sky.” And let me tell you, you will never have as much flirty fun in your life as this couple immersed in the glories of VR Machu Picchu, as they (I imagine) behold the legendary Intihuatana Stone…

 

4) Are These Guys the Bob Ross of VFX?

Bob Ross fever remains almost as high as Bored Ape fever. And so, enjoy this video from YouTube’s Corridor Crew, digital effects artists who usually critique Hollywood special effects. In this very special ep, the team raced against each other to recreate a Bob Ross painting tutorial with digital animation instead of paint, in the same half-hour time frame. And darned if they don’t do it.

While substantially less soothing than watching the beatific Ross, the VFX duel is fun, and the bucolic landscapes they conjure have a kind of next-gen charm. Not to ruin the ending, but if you’ve always dreamed that someday worlds might collide in a Joy of Painting crossover with The Witcher 3: Wild Hunt—well, that day may be closer than you think!

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If Khloé Kardashian Can Sue People for Posting an Unflattering Photo of Her, Why Can’t I? + Other Artists’-Rights Questions, Answered


Have you ever wondered what your rights are as an artist? There’s no clear-cut textbook to consult—but we’re here to help. Katarina Feder, a vice president at Artists Rights Society, is answering questions of all sorts about what kind of control artists have—and don’t have—over their work. 

Do you have a query of your own? Email [email protected] and it may get answered in an upcoming article. 

 

Page Six says that Khloé Kardashian has been suing people to take down unflattering photos of herself. (They’re not even that unflattering, they’re just not as flattering as they could be.) People put up unflattering photos of me all the time. Can I do what Khloé did? 

We get a lot of variations on this question, and it’s understandable. Most good nights out are followed by a hungover morning spent de-tagging photos. Wouldn’t it be nice to send a cease and desist to that one frenemy whose photos of you always end up being 70 percent neck? 

You might assume that Khloé and her team have discovered a dynamic new legal strategy—I mean, look at what her dad did for O.J.—but in reality, this story just demonstrates yet again the power of copyright. 

The photo in question was actually taken by an employee of the Kardashian business and posted accidentally. “Khloé looks beautiful but it is within the right of the copyright owner to want an image not intended to be published taken down,” Tracy Romulus, chief marketing officer for KKW Brands, said in a statement.

But in addition to being, well, a little obsequious, this language implies that Khloé is the copyright owner, when we know that copyright normally rests with the photographer. If I had to guess, I would assume that the photographer who took the photo has a work-for-hire contract with the Kardashian family, in which case the copyright does in fact belong to them. 

(Why is the New York Post able to host this photo when Instagram is not? Because almost all journalism falls under the category of fair use.) 

In other words, in absence of a formal work-for-hire contract, yes, your friend has a copyright claim on your jowls. Happy de-tagging.

Singer Paul Simon performs at the New Orleans Jazz & Heritage Festival on April 29, 2016 in New Orleans, Louisiana. (Photo by Scott Dudelson/WireImage)

Singer Paul Simon performs at the New Orleans Jazz & Heritage Festival on April 29, 2016 in New Orleans, Louisiana. (Photo by Scott Dudelson/WireImage)

Paul Simon is the latest musician to sell his entire song catalogue for a tidy sum. Do you foresee a way for fine artists to cash in on this developmentsomeday, somehow?

It’s true: Superstar musicians like Neil Young, Bob Dylan and Taylor Swift have all been cashing out in what can only be seen as a victory for copyright enthusiasts. Unlike Michael Jackson’s 1985 purchase of the Beatles catalogue, which seemed to be based in admiration but was done behind the back of his then-friend Paul McCartney, these new buyers tend to be financial entities motivated by nothing more than the value they assign to intellectual property. 

Why is this all happening now? I have my theories. It seems that collective rights organizations for musicians have been cracking down on YouTubers and Twitch streamers, which we’ve covered in this column before, as part of a broader campaign to make licensing music for internet videos just as expensive as it is for film and television. As the need for music proliferates, so do the songs’ value.  

Unfortunately, it’s hard to imagine a parallel scenario for visual artists. Musicians make money off of both performing their songs and receiving royalties from recordings. Once a painting is sold, however, copyright is all the artist has left (one of many reasons why it’s a terrible idea to sell your copyright). Much as I hate to place further weight on this bandwagon, I’m inclined to say that NFTs might actually be useful for visual artists here… Wait, don’t go! 

What excites me about NFTs is the potential for giving increased agency to the original creator. Since you can attach riders to the blockchain contract (including for a resale royalty), artists might finally be able to retain some control over their work, even after it has been sold. 

But, alas, until Twitch streamers start putting Picassos in their backgrounds, I don’t see artists making the same kind of bank from licensing their oeuvre as musicians do. 

Marina Abramović, The Artist is Present (2010). Courtesy of the artist and Sean Kelly Gallery,.

Marina Abramović, The Artist is Present (2010). Courtesy of the artist and Sean Kelly Gallery.

I’m planning on staging a piece of performance art on Zoom. Do I have to get likeness rights signatures from all of the audience members or any other kind of permission? 

The problem with performance artbesides the fact that it’s difficult to copyrightis that everyone usually leaves within the first three hours. Rude! Staging your performance on Zoom feels like a great way to allow people to drop in and out without having to make an awkward exit. 

Now for the copyright bit. Once the performance is fixed in tangible form, i.e. recorded, it is officially copyrighted and becomes an asset that you can sell (though maybe not for as much as you would like; even Marina Abramović is probably not as wealthy as you think she is).

Thankfully, the process of obtaining permission from audience members need not be onerous. Zoom has a recording disclaimer function built in, but I would suggest including a brief note in your email invitation as well. Just let viewers know that the whole thing is being recorded and may someday be displayed publicly, or perhaps even broadcast. You can also ask them to sign a simple release.

Chances are they will agree with no fuss and look forward to one day passing a monitor in a gallery and catching a glimpse of themselves in your recording. Break a leg!

Warhol's image over Lynn Goldsmith's 1981 photograph of Prince. Courtesy of Lynn Goldsmith.

Warhol’s image over Lynn Goldsmith’s 1981 photograph of Prince. Courtesy of Lynn Goldsmith.

Why did that judge rule against the Warhol Foundation in that copyright lawsuit involving the portrait of Prince? I can’t say I understand it.  

Many people are having trouble understanding it. The Warhol Foundation is appealing, and while I have not discussed the case with anyone there, in the interest of full disclosure I should say they are a client of ARS.

The case concerns a photograph of the Purple One taken by celebrity photographer Lynn Goldsmith for Newsweek magazine in 1981. In 1984, Vanity Fair commissioned Andy Warhol to make an illustration from one of the photographs, which it had licensed; Warhol went on to make 16 paintings based on the photo. Though a 2019 ruling found the works to be fair use, last month judge Gerard E. Lynch stated that the “Prince Series” “retains the essential elements of the Goldsmith Photograph without significantly adding to or altering those elements,” and ruled in Goldsmith’s favor on appeal. 

In his own public head-scratching about this ruling, Warhol biographer Blake Gopnik reminds us in The New York Times that Duchamp didn’t do anything to that urinal when he turned it into Fountain. It is the context that made it into art, which should have been enough for the Prince work. But fair use is a tricky thing, and one of the elements that goes into determining it is the degree to which the new work hurts the market for the original. I think Warhol’s treatment of Goldsmith’s photo, if anything, enhances its value. 

In essence, I can’t really help you understand Judge Lynch’s thinking, because it doesn’t make sense to me either. We’ll be watching the appeal with great interest.

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How a Brazen Hack of That $69 Million Beeple Revealed the True Vulnerability of the NFT Market (and Other Insights)


Every Wednesday morning, Midnight Publishing Group News brings you The Gray Market. The column decodes important stories from the previous week—and offers unparalleled insight into the inner workings of the art industry in the process.

This week, clawing down another art-tech rabbit hole…

 

MINT CONDITION

In the opening days of April, an artist operating under the pseudonym Monsieur Personne (“Mr. Nobody”) tried to short-circuit the NFT hype machine by unleashing “sleepminting,” a process that complicates, if not corrodes, one of the value propositions underlying non-fungible tokens. His actions raise thorny questions about everything from coding, to copyright law, to consumer harm. Most importantly, though, they indicate that the market for crypto-collectibles may be scaling up faster than the technological foundation can support.

Debuted as part of an ongoing project titled NFTheft, sleepminting serves as a benevolent but alarming crypto-counterfeiting exercise. It aims to show that an artist can be made to unconsciously assert authorship on the Ethereum blockchain just as surely as a sleepwalking disorder can compel someone to waltz out of their bedroom while in a deep doze.

Remember, to “mint” an NFT means to register a particular user as its creator and initial owner. Theoretically, this becomes the first link in a verified, unbreakable chain of custody tethered to an NFT for the life of the underlying blockchain network. Thanks to this perfectly complete, perfectly secure, and eternally checkable data record, the argument goes, potential buyers can trust non-fungible tokens without necessarily having to trust their owners or sellers. These traits add a valuable layer of security that traditional artworks could never rival with their eternally dubious off-chain certificates of authenticity and provenance documents.

Personne may have found a way to dynamite this argument for much of the art NFT market. Sleepminting enables him to mint NFTs for, and to, the crypto wallets of other artists, then transfer ownership back to himself without their consent or knowing participation. Nevertheless, each of these transactions appears as legitimate on the blockchain record as if the unwitting artist had initiated them on their own, opening up the prospect of sophisticated fraud on a mass scale.

To prove his point, on April Fool’s Day, Personne sleepminted a supposed “second edition” of Beeple’s record-smashing Everydays: The First 5,000 Days, the digital work and accompanying token that sold for a vertigo-inducing $69.3 million via Christie’s less than a month earlier. (My emails to Beeple and his publicist about the situation went unanswered.)

In our ensuing email exchange, Personne claimed he then gifted the sleepminted Beeple (Token ID 40914, for the real crypto-heads) to a user with the suspiciously appropriate handle Arsène Lupin, an homage to the famous “gentleman thief” created by Maurice Leblanc and recently reincarnated in a hit Netflix show. (Personne denied he was Lupin to the blog Nifty News.) Lupin then turned around and offered the sleepminted Beeple for sale on Rarible and Opensea, two of the largest NFT marketplaces—both of which eventually deactivated the listings. (Neither Rarible nor Opensea replied to my emails seeking comment.)

Why publicize any of this, you ask? Personne essentially sees himself as a so-called white hat hacker, meaning an ethics-driven coder who exploits technological flaws strictly to demonstrate how they can be fixed. He is a staunch believer in the potential of NFTs and crypto. However, he believes major “security issues and vulnerabilities” in smart contracts have been glossed over to make way for the gold rush. He also claimed to have launched the NFTheft project only after the crypto-community largely ignored or derided his attempts to spark earnest conversation.

The goal I want to achieve with this is to take the most expensive and historic NFT, and show that if it is not protected, how can we guarantee that any NFT is safe from intentional malice, fraud, forgeries, theft, etc.?” he wrote.

Although the sleepminting saga is hairier than a Haight-Ashbury commune, I think we can chop through the overgrowth using two questions with serious stakes for different participants in the NFT market. 

Screen grab of the NFTheft website showing details of the "sleepminted" token.

Screen grab of the NFTheft website showing details of the “sleepminted” token.

1. What does sleepminting tell us about the technological vulnerabilities of art-related NFTs?

 

Short Answer

The main smart contract driving the market might not be smart enough to secure the frenzied level of buying and selling we’ve seen in 2021.

 

Longer Answer

What’s clear is that Personne is exploiting a flaw in the standard ERC721 smart contract, which is used by the overwhelming majority of art-related NFTs transacting on the Ethereum blockchain. But it is not an easy-to-see flaw, and the effect is not being faked by Photoshop wizardry or some other non-crypto chicanery; the sleepminted Beeple really is minted in Beeple’s wallet, it really is transferred elsewhere afterwardand both of those transactions are memorialized forever on the blockchain. 

How, exactly, is Personne doing this at the level of code? He declined to elaborate, saying only that he would publicly reveal the details before initiating the next stage of the NFTheft project. Other crypto-fluent folks I talked to needed more time to investigate than my deadline would allow. But Personne revealed in one tweet that he had deployed a “custom-built” contract that did not have an unnamed ERC721 “security check in place,” allowing him to move the token from wallet to wallet without meeting the typical conditions (for instance, a buyer sending funds to meet a set sales price).

Good luck identifying the flaw, though. Kevin McCoy, the creator of the first NFT, tried running Personne’s sleepminting smart contract through a decompiler to get more insight into the source code. His highly technical, highly candid snap take on the results was that they were “fucking crazy” with “all kinds of shit going on,” but he could not decipher the actual function responsible for the mischief.

What McCoy could detect was that Personne’s customization was substantially larger and more expensive to deploy than a typical ERC721. The sleepminting contract consists of around 4,000 lines of code and cost 1.04 ETH, or about $2,500, in gas fees—roughly 12.5 times as much as it would usually cost to mint an average ERC721 token, if not more. (“Gas fees” are the term of art for the expenses charged to conduct a transaction on the Ethereum blockchain, with the price changing based on the network’s available computational resources.)

A courtroom sketch of Domenico De Sole on the witness stand with the fake Rothko painting he bought from Knoedler gallery. His case, which was separate from the one that jus settled, was the only one to go to trial. Photo: Elizabeth Williams, courtesy Illustrated Courtroom.

A courtroom sketch of Domenico De Sole on the witness stand with the fake Rothko painting he bought from Knoedler gallery. Photo: Elizabeth Williams, courtesy Illustrated Courtroom.

Why It Matters

Sleepminting is likely more sophisticated than the average NFT buyer’s understanding of the technology, making those buyers unlikely to question what appears to be blockchain-verified authorship.

This is especially important because we’re in a market frenzy for NFTs right now. Thorough vetting falls by the wayside whenever under-informed buyers flood into a largely unregulated space. Fraudsters have made millions in the past selling fake Jackson Pollocks on eBay, and the Knoedler forgery scandal proved that even knowledgeable collectors can be susceptible to high-level chicanery.  

I can’t rule out that a savvy crypto-collector might be able to detect a giveaway in either a sleepminting contract or its data trail. It’s also true that, even without Personne publicizing what he’d done, market players could use off-chain research to find out whether Beeple actually minted a second edition of Everydays—just as, say, Warhol collectors could consult the catalogue raisonné to make sure a particular Marilyn canvas is regarded as authentic.

Still, if bad actors began exploiting vulnerabilities in ERC721 contracts, it could theoretically plunge the NFT market into a forgery crisis on par with the antiquities market, where recent research showed that up to 80 percent of what is offered online is likely either looted or fake. 

Incidentally, Personne alleges that 80 percent of the NFTs on the market are “invalid and need to be redone” because of their vulnerability to sleepminting. That’s a difficult estimate to corroborate. But even if he’s overshooting by two or three times, the financial exposure would swell to millions of dollars in art-related NFTs alone. Isn’t that a prospect worth investigating?

A courtroom setup awaiting a witness. Photo: Friso Gentsch/dpa (Photo by Friso Gentsch/picture alliance via Getty Images)

A courtroom setup awaiting a witness. Photo: Friso Gentsch/dpa (Photo by Friso Gentsch/picture alliance via Getty Images)

2. Does sleepminting violate any U.S. laws? 

 

Short Answer

The legal exposures are murky and hard to act on, but they exist. In a way, that’s the point.

 

Longer Answer

At present, NFTs still occupy a legal gray zone. As of my writing, multiple cases pending in the U.S. could influence their ultimate classification. What’s unclear is how much immunity a sleepminter would have based on the lingering ambiguity.

Personne told me that, after being “thoroughly consulted and advised by personal lawyers and specialist law firms,” he is confident there are “little to no legal repercussions for sleepminting.” His argument is that ERC721 smart contracts only contain a link pointing to a JSON (Javascript Object Notation) file, which in turn points to a “publicly available and hosted digital asset file”here, Beeple’s Everydays image. (Remember, the NFT is almost never the artwork itself.)

He likened the idea of suing him to the “absurd” prospect of Apple suing “every single pedestrian for viewing or photographing their billboard in Times Square.” 

But multiple prominent art attorneys I spoke to felt Personne is standing on shakier legal ground. “If the hacker is not trying to pass the sleepminted work off as authentic and charging money for it, then he is probably not in any danger of being charged with criminal fraud,” said Steven Schindler. “If he were to be misrepresenting the nature of the NFT, and selling the works under false pretenses, then he would certainly be open to charges of fraud.”

But fraud isn’t the only issue at play here. Let’s return to Personne’s contention that the token merely points to a publicly viewable digital file. Querying the blockchain seems to show that the original Everydays NFT and Personne’s sleepminted “second edition” have two different URIs—essentially, the alphanumeric code identifying the actual image file that the token grants ownership to. This implies he downloaded the original file and re-uploaded it to a different online location. 

Further, it looks like he did so without making any changes to the work that could be positioned as “transformative,” like, say, Richard Prince cropping out the Marlboro ad copy in his Cowboys” photographs, or adding nonsensical comments to other people’s Instagram selfies in his New Portraits” series. (Two copyright infringement cases on the latter are currently pending in the Southern District of New York.)

Richard Prince. Photo: Patrick McMullan

So even though the sleepminted token is not the artwork, it still needs to point to the artwork in order to mean anything. If Personne made this happen by reuploading an unaltered digital copy of Beeple’s Everydays, as the URI suggests, then that could very well still qualify as unauthorized reproduction of an artwork whose copyright Beeple still owns.

In short, it’s possible a court could find him liable to be “in violation of Beeple’s exclusive right to publicly display his work,” according to Megan Noh, co-chair of art law at Pryor Cashman.

Personne may also be running afoul of what’s known as the Lanham Act, specifically a clause known as “false designation of origin.” Remember, the entire point of sleepminting is that its unauthorized attribution to Beeple appears legitimate on the blockchain. These claims are reasserted in the details of the sleepminted token on the NFTheft website (“Creator: Beeple (b. 1981)”) as well as the listings on Rarible and Opensea. 

The ‘statements’ on the website and/or created by the intentionally-manipulated metadata feel a lot like ‘false designations of origin,’ which could give rise to liability,” Noh said. “But there’s also an interesting question about whether an NFT can be considered a ‘good or service,’ which it would need to be for this area of the law to apply.”

Screen grab of the Rarible listing for the sleepminted token, showing the current owner as Arsene Lupin and the creator as Beeple.

Screen grab of the Rarible listing for the sleepminted token, showing the current owner as Arsene Lupin and the creator as Beeple.

Why It Matters

Personne’s copious public proclamations that the sleepminted NFT was not, in fact, authorized by Beeple may not protect him in a U.S. court—precisely because he engineered the blockchain to say otherwise. If a sleepminted token truly made it out “in the wild,” as Personne told me it did, then his exposure could only increase as the token moved through the secondary market to buyers who may be less aware of the NFTheft site, his social media presence, and any other links back to his white-hat rhetoric. 

That said, anyone who wanted to sue Personne would likely first have to untangle his identity, since it’s not easy to bring a pseudonymous party to court. Again, good luck.

Incidentally, this is one of the reasons it still seems unlikely to me that Lupin, the pseudonymous owner of the sleepminted NFT, is anyone other than the same person behind… uh, Personne. The best way to protect yourself from misunderstandings by subsequent owners is to ensure there are never actually any subsequent owners. 

Debating the legality of this particular episode misses the larger point, though. 

The NFTheft project aims to show that a gigantic proportion of the art NFT market is vulnerable to such malicious intent because of a structural flaw in the standard smart contract. If Personne were a bad actor, he could have sleepminted a much less famous NFT, kept quiet about his custom smart contract, and started selling directly to the most naive buyers he could find. That real people could be tricked into losing real money, and that anyone undertaking the ruse could plausibly be found liable for damages, reinforce why Personne’s gambit is worth our attention. 

We have already seen sophisticated hacks siphon tens, even hundreds, of millions of dollars out of cryptocurrency exchanges, decentralized financial entities, and blockchain-based “smart” organizations. Maybe it was only a matter of time before someone figured out a way to do the same to the part of the NFT marketplace that relies on ERC721 contracts. The question is whether the biggest and most influential players will take action before the black hats dig in.

[NFTheft]

 

That’s all for this week. ‘Til next time, remember what Upton Sinclar said: It is difficult to get someone to understand something when their salary depends on them not understanding it.

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The Gray Market: Why the New York Art Market Could Be Reshaped by the State’s Progressive New Budget (and Other Insights)


Every Wednesday morning, Midnight Publishing Group News brings you The Gray Market. The column decodes important stories from the previous week—and offers unparalleled insight into the inner workings of the art industry in the process.

This week, anticipating a new clash between collectors and the taxman…

 

AIM HIGH

On April 6, New York state announced a new budget that does exactly what many in the liberal-leaning cultural sector have been clamoring for every level of government to do in recent years: raise taxes on the highest-earning residents, partly to directly benefit the art industry. The question now will be whether this more progressive tax policy works as envisioned, or whether it backfires by driving the one percent away from spending, giving, and even living in New York.

All told, the state’s fiscal year 2022 budget will channel more than $1 billion in relief and recovery funding to small businesses within and beyond the cultural space. The lion’s share of that total ($865 million) will take the form of grants to small businesses, including both for-profit and nonprofit arts institutions accosted by our ongoing public-health nightmare. Another $139 million will be doled out to the same categories of recipients via tax credits. 

Of the package’s $865 million in grants, $60 million will be earmarked exclusively for cultural nonprofits. Two-thirds of this amount will arrive through a dedicated fund to help these entities bounce back in general, and one-third will be funneled through an array of capital grants specifically designed to assist with measures combating everyone’s least favorite spike protein, such as “outdoor performance space projects, flexible seating, [and] HVAC and filtration upgrades.” (Separate from these provisions, the budget also re-ups the $40 million in arts grants provided every year by the New York State Council on the Arts.)

While a significant portion of this new spending comes courtesy of federal aid to the Empire State, some of it will be fueled by higher tax rates hitting top-earning residents like a well-placed uppercut. For the 2022 through 2027 tax years, New York’s freshly ratified budget will increase the personal tax rate from 8.82 percent to 9.65 percent for filers with annual income over $1.08 million, and to 10.9 percent for the top income bracket, above $25 million.

How do these rate hikes actually translate into dollars and cents? Setting aside all other factors, any New Yorker with $3 million in annual income would see their starting state tax bill rise from $264,600 to $289,500—a delta of less than $25,000. 

Zooming out, state officials estimate that the new budget will bring in an additional $7.8 billion in tax revenue over the 2022 and 2023 fiscal years. That two-year stretch will be Albany’s most lucrative under the plan, since it will also see the tax rate temporarily ascend from 6.5 percent to 7.25 percent on business income above $5 million. 

To summarize, then, New York’s fresh fiscal blueprint raises a lot of money for statewide recovery by asking individual high earners to make what practically everyone else would call modest sacrifices. But many of the people being asked to pay more may see the situation differently, and their reaction could deal an unexpected blow to the New York art market.

President Joe Biden delivers remarks on International Women’s Day in the White House in Washington, DC. Photo by Alex Wong/Getty Images.

President Joe Biden delivers remarks on International Women’s Day in the White House in Washington, DC. Photo by Alex Wong/Getty Images.

COLLISION COURSE

Here’s one thing I know to be true about wealthy people: None of them makes decisions about their money or lifestyle based strictly on just one type of tax. It would be like trying to find their way out of the wilderness using a map that leaves out waterways and mountains. Instead, they (and their tax professionals) look at the entire landscape of levies and chart a course forward based on how everything coheres. 

This is important context in the U.S. right now, because president Joe Biden’s ambitious new infrastructure plan hinges on at least two major federal tax considerations. First, the administration hopes to pay for the program in part by elevating the corporate tax rate from 21 percent to 28 percent; this move would effectively double as a stealth wealth tax, since companies paying more to the IRS inevitably return less to shareholders (who disproportionately tend to be people of means).

The second issue is the state and local tax (or SALT) deduction, the amount any U.S. resident can lop off their federal tax bill because it has already been paid to those other two levels of government. 

In 2017, the Trump administration placed a cap of $10,000 on the SALT deduction—a change seen by several policy think tanks as being most damaging to high-earners in blue states, where taxes tend to be higher. No surprise, then, that multiple Democrats in the House of Representatives have already pledged to reject Biden’s infrastructure bill unless it eliminates the upper limit on the SALT deduction. Among them? Tom Suozzi of New York.

So on its own, Biden’s infrastructure bill embodies why high-earning participants in the New York art trade won’t evaluate the state’s new budget in a vacuum. Diana Wierbicki, the global head of art law at Withers Bergman LLP, pointed out to me that removing the SALT cap would lessen the impact of the New York increases on taxpayers. “On the other hand,” she added, “collectors may see changes in New York as a predictor of federal tax increases to come and therefore may react more strongly than the New York changes would in isolation predict.” 

What would it mean to react strongly? It depends on who we’re talking about. Wierbicki judged the state’s new budget as “unlikely to have a major impact” on the art spending of ultra-high-net-worth collectors (normally defined as those with investable assets of $30 million or more). She also anticipates few instances of donors reducing their financial contributions to arts institutions, particularly since other measures enacted under recent federal relief bills dramatically incentivize certain types of charitable giving through 2021. 

On top of this, I would wager that any self-styled art philanthropist would be absolutely crushed by their peers for scaling back their donations because of a minor rise in the state tax rate. Social currency and optics are far too important in this realm to do something so cheap. 

But Wierbicki cautioned that the state’s new budget could affect activity in the “middle tier” of the art market. Why? The tax increases will be felt more by the class I’ll call the unremarkably wealthy: New Yorkers earning a few hundred thousand to a few million dollars annually, giving them far less discretionary income to spare than UHNWIs. (Remember what Connor Roy told cousin Greg in Succession about being worth $5 million: “You can’t do anything with five, Greg. Five’s a nightmare… can’t retire, not worth it to work.”) 

Yet the New York art world isn’t just about spending, even at the apex. It’s also about presence, and presence may be the most interesting question provoked by the shifting tax landscape. 

The Breakers in Palm Beach. Photo courtesy The Breakers.

The Breakers in Palm Beach. Photo courtesy The Breakers.

SHOULD I STAY OR SHOULD I GO?

Attorney and art law specialist Thomas Danziger framed New York’s new budget memorably: “The current tax plan could have been devised by the Florida chamber of commerce.” Although he doubts any serious collectors would move elsewhere based on Albany’s latest budget alone, he echoed Wierbicki in stressing that what matters is how it contributes to the cumulative effect on every high-net-worth collector’s individual tax picture.

“Each of our clients has a different tipping point,” he said, “but there comes a point where the people in the top income bracket will make the decision that it’s no longer worth it to live in New York.”

The grand irony is that the driving force behind the state’s progressive budget—namely, the preceding year of devastation caused by the “c” word—has arguably made the prospect of bailing on the Empire State more palatable to ultra-high-net-worth collectors than it’s ever been. 

Danziger called 2020 a “dry run” for such a future given that so many wealthy people spent so much of 2020 in other elite-friendly locations like south Florida, California, Mykonos, and elsewhere. They didn’t just survive in these other destinations; they thrived, with many of their businesses and investment portfolios posting best-ever returns.

High-end dealers and auction houses followed their migration patterns, too, whether that meant setting up glitzy outposts in Palm Beach and the Hamptons, or just hopping on a plane for a sortie to a particular client and/or a target-rich selling environment.

It’s worth remembering that moving away for tax purposes wouldn’t necessarily mean vanishing from the New York art scene forever, either. The rules are complex, but if high earners are careful, there are still ways for them to spend significant stretches of any year in New York without qualifying as a resident owing state income taxes. (The annual upper limit is 183 days, but the closer you get to this threshold, the more onerous it becomes to prove you were just visiting.) Regardless, I promise you the collectors who would bankroll this lifestyle would also bankroll the tax attorneys and certified public accountants necessary to slide through every loophole. 

Pace Gallery's new space in East Hampton. Photo by Sylvia Muller. Image courtesy the Mill House Inn

Pace Gallery’s new space in East Hampton. Photo by Sylvia Muller. Image courtesy the Mill House Inn

In the end, though, I don’t think we’re at a point in the overall tax cosmos where New York’s modestly more progressive budget will push a sizable number of high- and ultra-high-net-worth art buyers out of state. The disruption seems too extreme relative to the tax savings they would get out of it.

As Ginia Bellafante wrote in the New York Times last week, how many people “making $2 million a year will really move from the Upper East Side to South Beach—a location where climate models predict two feet or more of sea-level rise by 2060—for a savings roughly equal to the cost of a used Chevy Malibu”?

That could change, however, depending on what else transpires at the federal level in the years to come. Yes, the richest Americans have a long history of howling at tax increases no matter the circumstances; my favorite example remains Jack Morgan, the third-generation leader of the Morgan banking dynasty, slandering the New Deal in 1933 as a Trojan Horse aimed at the “extinction of all wealth and earning power” when he himself paid no personal income tax in the three preceding years and the nationwide unemployment rate was 25 percent.

Still, I agree with Danziger that everyone has a limit. Like an unfaithful man, the very wealthy tend to only be as loyal as their options make them—and they have never had more options in the art market and luxury living than they have in 2021. Let’s see how unsexy but important changes to the tax code might direct their wandering eyes and collecting dollars in the years to come.

[The State of New York | The New York Times]

 

That’s all for this week. ‘Til next time, remember: Things change very slowly, then all at once.

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