Analyzing the Very Bizarre Sale of Melania Trump’s $170,000 NFT

The crypto used to purchase the former first lady’s NFT came from the NFT creator themselves, blockchain records reveal. But why?

Feb 8 2022, 7:08pm

The $170,000 purchase of an NFT collection auctioned by Melania Trump was made by the entity that originally put the NFT up for sale, according to blockchain records. 

The former first lady got into NFTs last year, launching her own website and lining up a slate of auctions. On Jan. 11, Trump started auctioning the "Head of State Collection, 2022" on the Solana blockchain, a package deal that paired the "iconic white millinery masterpiece worn by Mrs. Trump" (a wide-brimmed hat she wore during a 2018 visit with French President Emanuel Macron) with a watercolor of her wearing it, as well as an NFT. The opening bid, according to a press release, was "the equivalent of $250,000" denominated in SOL tokens (1,800 SOL at the time) and a "portion" of the proceeds would be used to "provide foster care children with access to computer science and technology education."

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After the auction's conclusion, the New York Times ran a piece describing the sale as attracting a few bids all around 1,800 SOL, ultimately ending with somebody purchasing the NFT for 1,800 SOL worth $170,000 at the time (now $200,000), a price far below the figure touted by the auction's press release and which the paper described as "deflated results" due to a wider crash in the price of cryptocurrencies. 

Now, according to Solana blockchain records reviewed by Motherboard and shared with an independent researcher, we know who bought the NFT collection: Melania Trump herself, or at least, whoever set up the auction for her. In a statement to Motherboard from "the Office of Melania Trump," Trump said "the nature of Blockchain protocol is entirely transparent. Accordingly, the public can view each transaction on the blockchain. The transaction was facilitated on behalf of a third-party buyer." 

Despite the transparent nature of the blockchain, however, Trump's office would not elaborate on who actually bought the NFT or the details around why the transaction was set up so that the creator of the NFT provided the crypto to the auction winner, and seemingly got the funds back. 

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Public blockchains like Solana (and Bitcoin and Ethereum) have the benefit of allowing anybody in the world to follow the money, since every transaction is tied to an address and records are permanent. According to Trump's NFT website, the auction winner had the address "497Zu5gfWSv4VNsoQfjixWXQZmKZ2pDzkVSASDBqnFL2." Without getting too bogged down in eye-glazing detail (that will come later), it went like this: The auction winner's address was funded with 1,800 SOL on January 25, which came from an address (let's call it Address X) that was itself funded by the address that created Melania's NFT. After the auction, the NFT creator address sent 180,000 SOL back to Address X which converted it into USDC, a stablecoin pegged to the U.S. dollar. 

In other words, the winner of Melania Trump's NFT got the money from none other than the creator of the NFT itself, and an address linked to the NFT creator got the money back. 

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Motherboard shared the blockchain records with pseudonymous independent blockchain sleuth zachxbt, who shared the following analysis confirming that the crypto for the winning bid was provided by the NFT creator: 

If we visit Solscan.io (a Solana Blockchain Explorer) we see Melania Trump’s Head of State Collection, 2022 NFT was created on 01/11/2022 by 39ui using Metaplex.

01/23/2022 - 39ui sends 473,657.64 USDC to 3CTu.

01/25/2022 - 3CTu swaps 166,900 USDC for 1,816.08 SOL using Raydium (Solana decentralized exchange). A few minutes later 3CTu sends 1,799.5 SOL to 497Z.

01/26/2022 - 497Z makes a bid on the NFT for 1,800 SOL and wins the auction.

Later that day the NFT creator 39ui claims the 1,800 SOL and sends it back to 3CTu.

01/29/2022 - 3CTu swaps 1,800 SOL for 168,313.24 USDC using Raydium.

As of 02/08/2022 all of the USDC sits in 3CTu’s account and the NFT in 497Z’s account.

Given that the cryptocurrency for the purchase was provided by the NFT creator, and sent back to an address associated with the NFT creator, the only realistic option (assuming the mystery buyer story is true) is that the buyer does not use cryptocurrency and sent Trump's camp dollars to complete the entire transaction with, which it did on their behalf. "Not impossible," zachxbt said in a message, "but a weird request."

But this doesn't explain the bizarre chain of transactions and multiple wallets, including Address X (which zachxbt referred to as "3CTu"), which ultimately received the funds, or why the winning bid of a public crypto auction was facilitated by the creators of the auction and turned out to be the exact minimum amount. 

 "Why was 3CTu needed? Why would [the auction winner] send the exact amount for a winning bid? Why was the money sent back to 3CTu? All my unanswered questions…" zachxbt wrote. 

One of the few plausible scenarios, if what Trump's camp is saying is true, is that the NFT project went through the trouble of facilitating a buyer not using crypto—instead of anyone bidding SOL through the auction website—because crypto was crashing and the bids, all around 1,800 SOL, no longer came close to the stated minimum of $250,000 USD. Perhaps the buyer was willing to pay $250,000 in dollars (or more), and Trump's NFT project effectively made them the winner, converting a portion of it into SOL to win the auction. It's worth noting that the "3CTu" address holds over $400,000 worth of USDC tokens, which it converted a portion of into SOL to use in the auction, and back into USDC. However, even in this scenario it's not clear why this middle wallet was needed, versus the NFT creator address sending the funds straight to the winner and back again. 

The Office of Melania Trump did not respond to follow-up questions regarding the identity of the alleged mystery buyer, how the transaction was conducted, if it was conducted in USD, and how much USD the buyer ultimately paid. 

Tagged:

Trump, cryptocurrency, melania trump, crypto, NFT, solana

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