Problems with NFT tokens

In October 2021, Furey set up a DAO or decentralised autonomous organisation called PegzDAO to auction an exclusive NFT with Pepe called “FEELSGOODMAN Series 20, Card 50”. In addition to the one token that was going to be auctioned, the DAO released another 99 NFTs, which were left for safekeeping within the organisation.

Meanwhile, Furey previously had another NFT collection called "Sad Frogs District" on the OpenSea platform, but it was removed for copyright infringement.

NFT token FEELSGOODMAN Series 20, Card 50

This showed that Pepe’s intellectual property rights had to be recognised by the community to authenticate the PegzDAO collection. That is, the new collection from the meme creator’s own DAO is supposed to be the “original”. And unsurprisingly, it immediately attracted the attention of investors.

Pepe frog meme creator Matt Fourier

According to CryptoSlate, the token went to collector Halston Thayer for 150 ETH, or about $537,000 at the time of the transaction. Given that there was only one NFT at the auction that was associated with the legendary meme, such a price is well worth it. As a reminder, previously unique tokens were sold at much higher prices. However, a little later the case took a strange turn.

Thayer sued PegzDAO for over $500k, claiming that the organisation had intentionally misled the community and was directly responsible for the steep drop in the value of his NFT token. The reason for this is that DAO issued another 46 copies of the token after Thayer’s bid in the auction was accepted.

The buyer’s argument is that he was allegedly deceived by not mentioning the issuance of additional tokens. In the court documents, lawyers on the plaintiff’s side also referred to the following tweet, which stated the issue of exactly one token from PegzDAO’s official account. This tweet was published in response to a question from a community member who stated that his friend had allegedly received three NFTs from Pegz at once.

However, further in the comments, a collector nicknamed aurepa, who is signed by Matt Fury and PegzDAO, stated that every DAO member will still receive a copy of NFT. On 4 October 2021, PegzDAO tweeted a list of DAO members with over thirty names. This could potentially mean that DAO members will auction off around thirty more tokens at a later date.

Let's summarise the interim summary of the claims in court. Thayer bought NFT with the expectation that it would indeed be one token in its own right. Some time later, PegzDAO gave away virtually "copies" of the token - the same meme associated with the new NFTs. Because of this, the collector now has not a single copy, but one of several dozen, which will significantly hit its value when the other DAO members sell their tokens.

What could the lawyers have missed?

You can search for transactions on OpenSea and match the wallets that received a “free” copy of NFT with the list of DAO members from Twitter. For example, this wallet below links to JK23’s Twitter profile, whose nickname appears on the list of the decentralised organisation.

JK23’s page on OpenSea

That said, the wording of the collection’s advertising campaign can be considered ambiguous: it notes that one token is up for auction, but there is no confirmation that other tokens cannot be sold later. Lawyers, however, need to prove that the wording is indeed misleading. Otherwise, it could be considered Thayer’s “own fault” because he misinterpreted the terms of the auction.


We think it's difficult to predict the outcome of this case. After all, NFT-tokens are a new asset class which is still not accepted by many people. Accordingly, the judges may treat the situation very differently. Time will show what the outcome of these hearings will be.

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