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NFT art sales are booming. Just without some artists' permission. – NBC News

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Digital thieves had stolen from Aja Trier before. 
Trier, a painter in San Antonio, often riffs on Vincent van Gogh’s “Starry Night,” adding dogs or dinosaurs to it, or reimagining it as a desert landscape or Mordor from “Lord of the Rings.” She sells versions on mugs and mouse pads and pillows, and over the years she’s caught and stopped people selling pirated versions of her work on Amazon and other online marketplaces.
But thanks to the explosion of the NFT art market, thieves have started stealing her work at a jaw-dropping rate. Last week, an unidentified user on OpenSea, the dominant marketplace for the burgeoning NFT art market, started putting tens of thousands of listings of her work, often duplicates, up for sale. Thirty-seven of them sold before she was able to convince the platform to take them down.
“They just kept taking and remaking them as NFTs,” Trier said. “It’s so flagrant. And if it happens to me, it can happen to anyone.”
Trier’s story has already become common in the burgeoning world of NFT art sales. RJ Palmer, a San Francisco artist who designs creatures and monsters both as commissioned digital works and for movies and video game companies, said issuing takedown requests to NFT platforms for his work became a daily routine before he eventually gave up.
“It got to be too many. It became this part of my day,” Palmer said, adding that he would constantly send emails trying to get NFTs taken down. “This is putting so much work on me. I just don’t want to deal with it.”
As the NFT art market takes off, systems to ensure a buyer is making a legitimate purchase of digital ownership have failed to keep up. Anonymous thieves now regularly steal whatever digital art they can find online and pass it off as their own to sell. While NFT proponents tout the technology as a way to revolutionize arts patronage, the rapidly growing digital marketplaces that enable those sales have so far done little to stop that piracy.
NFTs, short for nonfungible tokens, have exploded as a new kind of art market in the past two years, promising a way for people to prove they own a digital asset. Rooted in the same blockchain technology as cryptocurrencies like Bitcoin and Ethereum, NFTs have been called everything from “a geeky implementation of bragging rights” to digital certificates of authenticity.
Actors, musicians, athletes and even political campaigns have jumped into the space, issuing all manner of NFT-connected digital knickknacks. NFT trading volume grew rapidly, hitting $10.7 billion in the third quarter of 2021, according to analytics platform DappRadar.
In the art world, NFTs were quickly hyped as solving a variety of problems. They offered a way for artists to monetize digital art, ensure they could sell their work and even make money if their art were sold in the future. NFTs are not art themselves but rather digital deeds, certificates that can be associated with a piece of art and then bought and sold as representative of ownership.
But rapid growth has also opened the door for rampant piracy and fraud. On most NFT platforms including OpenSea, by far the largest NFT marketplace, people can create an account and start selling whatever digital images they want to upload. While that’s helped OpenSea grow rapidly (the company announced Tuesday it had been valued at $13.3 billion in a recent funding round), the platform is barely moderated, forcing artists to actively patrol OpenSea and its competitors to try to get their work taken down.
In an emailed statement, an OpenSea spokesperson said, “We take theft seriously and have policies in place to meet our obligations to the community and deter theft on our platform,” and the company is “actively expanding our efforts across customer support, trust and safety, and site integrity.”
While there is little data to illustrate exactly how common the problem is, there are some indications it’s widespread. One comes from DeviantArt, one of the internet’s largest digital art platforms, which has started constantly scanning blockchains used by NFTs to alert users when copies of their work are shown on NFT exchanges. DeviantArt has sent alerts to thousands of artists since September, Liat Gurwicz, the company’s chief marketing officer, said.
“Art theft is nothing new. We’re just seeing it at a completely new scale with everything that’s happened with NFTs,” Gurwicz said. Artists have to take matters into their own hands to get their work taken down, she said.
“Right now, we are not aware of other solutions that artists can use,” she said.
Currently, OpenSea’s process to take down sales of stolen images puts most of the onus on the artists. A seller doesn’t need to provide proof of ownership or use their real name to start an auction, but an artist filing a copyright notice has to share personal information like their real name and links that prove they’re the real owner of a work.
Ashli Weiss, a Silicon Valley lawyer who has published a guide for how to send copyright notices to NFT marketplaces, said the burden on artists is exacerbated by the fact that many NFT thieves appear to be automated bots.
“These bots are not looking just for NFT art that’s already been minted and they’re trying to resell it,” Weiss said. “They’re going after artists who don’t even know what an NFT is, and that honestly is probably making the counterfeit sellers a lot more money because they don’t have people taking their work down.”
Even though OpenSea tends to respond to takedown requests, the actual idea of copyright in the NFT space is tricky, said Brian Frye, a professor of intellectual property law at the University of Kentucky who has sold his own art as NFTs.
Since an NFT isn’t an actual image, but rather a receipt or digital deed that points to an image, its sale wouldn’t violate an artist’s copyright, he said. Only the image uploaded to and hosted on OpenSea would.
“All [an NFT] is, is a URL saying ‘Look at this place on the internet,’” Frye said.
“Telling somebody to look at this URL, there’s no copyright infringement there, because no original copyright-protected element of anything is being copied,” he said. “So the NFT itself is just irrelevant to the question.”
Kevin Collier is a reporter covering cybersecurity, privacy and technology policy for NBC News.
© 2022 NBC UNIVERSAL

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Starbucks details its blockchain-based loyalty platform and NFT community, Starbucks Odyssey – TechCrunch

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Starbucks is today officially introducing Starbucks Odyssey, launching later this year — the coffee chain’s first foray into building with web3 technology. The new experience combines the company’s successful Starbucks Rewards loyalty program with an NFT platform, allowing its customers to both earn and purchase digital assets that unlock exclusive experiences and rewards.
The company had earlier teased its web3 plans to investors, saying it believed this new experience would build on the current Starbucks Rewards model where customers today earn “stars” which can be exchanged for perks, like free drinks. It envisions Starbucks Odyssey as a way for its most loyal customers to earn a broader set of rewards while also building community.
To develop the project, Starbucks brought in Adam Brotman, the architect of its Mobile Order & Pay system and the Starbucks app, to help serve as a special advisor. Now the co-founder of Forum3, a web3 loyalty startup, Brotman’s team worked on Starbucks Odyssey alongside the Seattle coffee chain’s own marketing, loyalty and technology teams.
While Starbucks had been investigating blockchain technologies for a couple of years, it has only been involved in this particular project for around six months, Starbucks CMO Brady Brewer told TechCrunch. He says the company wanted to invest in this area, but not as a “stunt” side project, as many companies are doing. Rather, it wanted to find a way to use the technology to enhance its business and expand its existing loyalty program.
It opted to make NFTs the passes that allow access to this digital community, but it’s intentionally obscuring the nature of the technology underpinning the experience in order to bring in more consumers — including non-technical people — to the web3 platform.
“It happens to be built on blockchain and web3 technologies, but the customer — to be honest — may very well not even know that what they’re doing is interacting with blockchain technology. It’s just the enabler,” Brewer explains.
To engage with the Starbucks Odyssey experience, Starbucks Rewards members will log in to the web app using their existing loyalty program credentials.
Once there, they’ll be able to engage with various activities, which Starbucks called “journeys” — like playing interactive games or taking on challenges designed to deepen their knowledge of the Starbucks brand or coffee in general. As they complete these journeys, members can collect early digital collectibles in the form of NFTs (non-fungible tokens). Starbucks Odyssey, however, does away with the tech lingo and calls these NFT collectibles “journey stamps” instead.
Additionally, a set of limited-edition NFTs will be available to purchase in the Starbucks Odyessy web app, which also works on mobile devices. Though hosted on the Polygon blockchain, these NFTs will be bought using a credit or debit card — a crypto wallet is not required. The company believes this will make it easier for consumers to engage with the web3 experience by lowering the barrier to entry. It also won’t complicate consumers’ transactions with things like “gas fees,” preferring to offer a bundled price.
The company is not yet ready to share what its NFTs will cost or how many will be available at launch, saying these are decisions that are still being ironed out.
However, the various “stamps” (NFTs) will include a point value based on their rarity and can be bought or sold among Starbucks Odyessy members in the marketplace, with the ownership secured on the blockchain. The artwork on the NFTs is being co-created by Starbucks and outside artists, and a portion of the proceeds from the sale of the limited-edition collectibles will be donated to support causes chosen by Starbucks employees and customers.
By collecting the stamps, members will gain points that can unlock exclusive benefits.
These perks go beyond those you can earn with a traditional Starbucks Rewards account and its “stars.” While today, members can earn things like free coffee, free food or select merchandise, the points earned in Starbucks Odyessy will translate into experiences and other benefits.

Starbucks Hacienda Alsacia. Image Credits: Starbucks(opens in a new window)
On the lower end, that could be a virtual espresso martini-making class or access to unique merchandise and artist collaborations. As you gain more points, you may earn invites to special events hosted at Starbucks Reserve Roasteries, or even earn a trip to the Starbucks Hacienda Alsacia coffee farm in Costa Rica. It’s expected the very largest perks will be reserved for those who purchase NFTs, though lesser versions may be offered to those who earn their way up.
For instance, a paid NFT could offer the full travel package and farm tour, while an earned NFT could offer the tour alone with flights and hotels left up to the user. Starbucks hasn’t made any formal decisions on this front, however.
But what the company can say is that it wants to deeply integrate the program with its existing loyalty rewards, beyond simply using the same user account credentials for both programs.
Brewer says Starbucks is already imagining how some of the activities that earn NFTs will be connected to real-world Starbucks purchases, for instance.
In Odyssey, users earn NFTs by doing challenges, which might also include a real-world activity like “try three things on the espresso menu.” This would require the user to show their barcode at checkout — as they would if earning stars — to have their transaction counted toward the Starbuck Odyssey challenge. The company is still determining what mix of games, challenges and quests it will include at launch.
“But we’ll have experiences that do link directly to customers’ behavior in our stores,” Brewer stresses. Most importantly, the company wants to make gaining NFTs something anyone can do — not just those with money to blow on digital collectibles, as is often the case with current NFT communities, which price out the average user.
“There will be a lot of ways for people to earn [rewards] without having to spend a lot of money,” says Brewer. “We want to make this super easy and accessible. There will be plenty of everyday experiences customers can earn like virtual classes or access to limited edition merchandise, for instance. “The range of experiences will be quite vast and very accessible,” he adds.
Starbucks says it explored all the different blockchains for the project but landed on the “proof-of-stake” blockchain technology built by Polygon for this effort because it uses less energy than first-generation “proof-of-work” blockchains, which is more in line with its conversation goals.

Image Credits: Starbucks (opens in a new window)
The idea to enter into the world of web3 makes sense for a company known for taking advantage of emerging technologies and making them more approachable and easy for consumers to access. In years past, Starbucks introduced Wi-Fi in its stores to encourage customers to spend more time during visits. It also pushed the idea of mobile wallets long before Apple Pay became ubiquitous. And it made mobile ordering the norm well ahead of the COVID pandemic, when other restaurant chains picked it up.
But one criticism leveraged against many traditional businesses when they enter the web3 market is that they’re approaching it as a marketing stunt, not a real endeavor. Starbucks, of course, argues that’s not the case here — but only time will tell how serious its interest may be.
“We’re bullish on the future of these technologies enabling experiences that were not possible before,” Brewer claims. The intention is to be flexible and move with the customers as the web3 market changes, he explains. “It’s really important that we’re looking at it for the long-term,” he continues. “But, given that we’re plugging it into our industry-leading, massive scale rewards program — we’re committed,” he says.
The company says its web3 platform will open its waitlist (waitlist.starbucks.com) on September 12 and will launch later in the year. It will remove the waitlist and open the platform more broadly sometime next year.

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Tyler Hobbs' Fidenza NFT Project Gets $1M Pump Over 48 hours – CoinDesk

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DOJ Asks Congress for Tools to Limit NFT Money-Laundering Risk – PYMNTS.com

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Down at the very bottom of the crypto crime report the Justice Department issued last week was a request that could make it a lot harder to buy and sell NFTs.
Citing examples of criminals using the sale of the popular nonfungible tokens that hold art, video, music and collectibles to launder funds, the Justice Department asked Congress to define some of all NFTs as “value that substitutes for currency” under the Bank Secrecy Act (BSA).
Doing so, it said in “The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets,” would “make clear that its key [anti-money-laundering (AML) and countering the financing of terror (CFT)] provisions — including the obligations to have customer identification programs and report suspicious transactions to regulators — apply to NFT platforms, including online auction houses and digital art galleries.”
See also: DOJ Seeks to Double Jail Time for Money Transmission Crimes
The impetus, the department said, is the “explosive growth in the demand and corresponding markets for NFTs, perhaps most notably in the area of digital art.”
Substantial Risk
This “presents substantial money-laundering risks,” it said, citing a February Treasury Department study on money laundering in the broader art market.
“NFTs can be used to conduct self-laundering, a sequence in which criminals purchase an NFT with illicit funds and then resell to a purchaser who pays for it with clean funds unconnected to a prior crime,” that report noted.
It also found that in most cases, “digital assets that are unique, rather than interchangeable, and that are used in practice as collectibles rather than as payment or investment instruments … are generally not considered to be virtual assets under [international regulations].”
The “nonfungible” part of NFT means that each is unique and cannot substitute for any other, as opposed to cryptocurrencies like bitcoin which all have the same uses and value.
NFT marketplaces “may take the view that this definition [of a ‘value that substitutes for currency’] does not apply to their activities — and that they are thus not subject to the BSA’s anti money-laundering and anti-terrorism laws, the department said.
Justice is asking Congress to amend the BSA “to make clear that its key AML/CFT provisions — including the obligations to have customer identification programs and report suspicious transactions to regulators — apply to NFT platforms, including online auction houses and digital art galleries.”
Already There
Redefining NFTs as “value that substitutes for currency” would allow the Treasury Department’s Financial Crimes Enforcement Unit (FinCEN) to “potentially seek to regulate such activity under its money transmission regime,” a trio of lawyers at Skadden, Arps, Slate, Meagher & Flom wrote in an April blog post.
That, according to Jamie Boucher, Eytan Fisch and Javier Urbina, would require NFT marketplaces to register as money services businesses (MSB) with FinCEN.
Some types of NFTs — notably those used to fractionalize tangible assets like physical artworks and real estate, but also other valuable art or collectible tokens — are likely securities, the Securities and Exchange Commission (SEC) has said.
See more: How Did NFTs Become SEC’s Newest Crypto Target?
In FinCEN’s view, the trio noted, those can be repurposed to fit the definition of “value that substitutes for currency” and thus may already require MSB licenses.
 
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