This week, a collector known as 'Pranksy' bought what they thought to be an NFT created by the artist Banksy, for the cryptocurrency equivalent of GBP 244,000. The work, titled the 'Great Redistribution of the Climate Change Disaster' turned out not to be Banksy's first official NFT drop, and instead has been described as an 'elaborate hoax'.

The work was listed for sale on the Open Sea platform - a marketplace which has proved popular in recent months for the buying and selling of NFTs and crypto collectibles. By the buyer's own admission, the NFT looked nothing like a Banksy work. However, Banksy's official website had a (since deleted) page called 'NFT' which included a link to an auction site selling a work of the same title as that listed on Open Sea.

Pranksy has since had the majority of the purchase cost refunded by the seller. Pransky believes that the hoax, and the return of his money points to someone trying to make a bigger point about NFTs 'highlighting the vulnerabilities of NFT trading'.

This isn't the first time we've seen the sale of fraudulent NFTs. Over the last few months, several artists have found their works for sale as NFTs not minted or approved by the artist themselves. As we touched on in part 2 of this series, copyright doesn't (typically) transfer with the sale of an NFT. What a buyer purchases (and the perceived value of an NFT) lies in the verification from the artist that the buyer is acquiring something minted by the artist - a digital token of an original work. With this, the authenticity of an NFT is dependent on the seller being who they say they are. The sale of fraudulent NFTs undermines the very promise of NFTs - that a buyer is attaining something with cryptographically secure authenticity.

The Pranksy hoax isn't the first and is unlikely to be the last. Despite the proliferation in NFT sales over the past few months, it's worth remembering that NFT platforms are still in their nascent stages. These platforms, and NFTS, remain largely if not wholly unregulated. The Pranksy sale serves as an example that understanding the legal and regulatory issues and asking the right questions is critical when deciding whether or not to purchase, or issue an NFT.

(with Lauren Neal)