NFT marketplace LooksRare has confirmed that its official team has raked in over $30 million in cash by staking the platform’s native LOOKS token, triggering the community’s fears of a rug pull.
LooksRare Cash Out Causes Outrage
There has been quite an outrage over the news of the LooksRare cashout. As one of OpenSea’s biggest competitors, the $30 million worth ETH cash-out has riled up the community, which is demanding a LOOKS token buyback instead of storing Ethereum. However, despite all the online rage, LooksRare has claimed that the cash out did not result from anything untoward like stealing funds.
They have explained that thanks to the marketplace’s declared fee structure, the team was able to stake unattributed LOOKS tokens, which earned them 10,500 WETH, estimated to be worth around $30 million. Normally, the LOOKS tokens are rewarded to users when they sell their NFTs. In this case, the team staked the unattributed tokens and was then able to cash out the wrapped Ethereum tokens using Tornado Cash, a coin mixing protocol.
Community Fears Rug Pull
The community has lashed back at the LooksRare team over this issue, causing the price of the LOOKS token to drop by nearly 15% as a result. The general consensus among the troubled community members is that this is another instance of a rug pull that has plagued crypto investors and led to losses of over $2.8 billion in 2021. A Twitter user pointed out –
“The LooksRare team has already cashed out 9169 WETH (over $25m) in less than 2 weeks. Props to them—an ingenious scheme to get paid massively in WETH rather than LOOKS.”
The community has not been convinced by the team’s explanations and still remains enraged. One user questioned the use of the mixing tool and stated that the team is just doing damage control in the face of getting caught with the cash-out.
LooksRare Claims No Ulterior Motives
One of the core members, who is pseudonymously known as Zodd on Twitter, countered that the team had never hidden the fact that it earns in WETH and linked multiple documents to support their claim. Furthermore, they also corrected claims that the team had cashed out $73 million in WETH, stating that the actual amount is around $30 million. Zodd pointed out that the team had been working for over six months without compensation and had also taken care of costs amounting to a seven-figure number before the launch. Zodd tweeted,
“I have no issue with contributors claiming the WETH they’ve earned so far, especially after all these months of working with no compensation. A lot of it also probably went back into buying NFTs.”
Finally, they addressed all rumors of a rug pull and categorically denied such intentions.