Furie has done all the artwork for PegzDAO, a decentralized autonomous organization selling NFTs in his signature style. As a one-off promotion and fundraiser for PegzDAO, the group auctioned off a Rare Pepe NFT featuring art from Furie himself. The lawsuit, filed by the person who won the auction, alleges that Furie and Chain/Saw (the company behind PegzDAO) falsely advertised the rare nature of the NFT and released identical editions of it, tanking its resale value.
Rare Pepes have long been part of the blockchain art scene. In 2016, Rare Pepe Wallet creator Joe Looney minted 500 tokens of an NFT called FEELSGOODMAN on the Bitcoin blockchain with art reserved for Furie to backfill himself one day. Now, years later, Rare Pepes have found a second life by being “wrapped” for trade on the Ethereum blockchain and platforms like OpenSea. In October, Chain/Saw announced that FEELSGOODMAN had been retrofitted with bespoke art from Furie, wrapped on Ethereum, and one token would be auctioned in a collaboration between Chain/Saw, Furie, and Looney.
FEELSGOODMAN depicts a chilled out Pepe resting in a pond and bearing his big green ass. It looks like a Magic: The Gathering card, but Furie has signed his name in the space where the card description would be. “And with that, the Rare Pepe Directory is complete,” Looney said in a tweet.
Furie got into NFTs after a years long legal battle to liberate his cartoon frog from the alt-right and regain some control over his creation. His journey into the blockchain hasn’t been completely smooth, however, and last year he used copyright law to kneecap a Pepe-derivative NFT project.
Chain/Saw said it would burn 400 of the FEELSGOODMAN tokens (effectively taking them out of circulation), auction one off to the public, and that the other 99 would “remain in the PegzDAO.” According to the lawsuit, a man named Halston Thayer won the auction paying 150 ETH, which was roughly $537,084.00 at the time of purchase. According to the filing, Thayer believed that he would be the owner of the only FEELSGOODMAN card NFT in circulation, with the other 99 being locked into the DAO.
That didn’t end up being the case, according to the lawsuit, and blockchain records show that dozens of FEELSGOODMAN NFTs were distributed after the auction ended.
“Despite Defendants’ previous statements and repeated representations that the NFT was a ‘rare Pepe’ and ‘unique asset,’—i.e., a one-of-a-kind NFT— on October 24, 2021, Defendants released 46 of the 99 remaining Pepe NFTs, significantly devaluing Plaintiff’s Pepe NFT to less than $30,000.00, hundreds of thousands of dollars less than what he paid for this purportedly ‘unique asset.’ Upon information and belief, those 46 NFTs were given away for free.”
As evidence for the supposed fraud, the lawsuit cited a tweet from the PegzDAO twitter account. Replying to someone saying they were getting three FEELSGOODMAN tokens from Pegz, the DAO clarified its terms. “1 [Rare Pepe] card to 1 member of PegzDAO rest are being held indefinitely,” the tweet said on October 8, the same day Thayer placed the winning bid in the auction.
According to a representative from Chain/Saw, it was always the plan to auction one off to the public and give the others to members of the DAO—which would technically fulfill the language of the auction’s advertisements—rather than keep them all in a central address indefinitely.
When it tweeted “1 [Rare Pepe] card to 1 member of the PegzDAO,” it meant that every member of the group would receive a copy of the card after the auction, clarifying a rumor that people would be getting more than one.
“The auction listing was clear that there were 100 total remaining FEELSGOODMAN NFTs,” a representative of Chain/Saw told Motherboard. “So when Thayer placed his bid, he knew there were 99 other copies that could eventually come to market.”
Chain/Saw shared Twitter DMs it said were from Thayer and dated October 8, 2021 with Motherboard that it says make it clear he understood this, too. Motherboard could not verify that the account genuinely belongs to Thayer, although its timeline contains a tweet celebrating winning the FEELSGOODMAN NFT and the username, KlausStortebeker, matches the auction winner’s according to the auction website. Requests sent to Thayer’s lawyers and the account itself were not returned.
“When you say ‘1 RP card to 1 member of PegzDAO and the rest are held indefinitely,’ are you saying that every member of the PegzDAO gets 1 card, or that only 1 card gets raffled off the DOA members and you hold the other 98,” the DM said. “Wouldn’t have changed my bid as I think 150 is a good deal, but just curious.”
PegzDAO responded a few minutes later. “We’re giving 1 RP card to every member of the PegzDAO (right now about 40+ people).”
“I probably should have researched more before I yolo’d 150, but still glad I got it either way,” the account responded.
Chain/Saw said it thought Thayer was happy with the purchase. The lawsuit says Thayer sent Chain/Saw a letter requesting a refund in February, but the company told Motherboard it never saw it. “We didn't hear anything more from him until we got a letter from his lawyers months later,” it said. “As for Matt Furie, he is the artist and creator here, not the seller or dealer. We don’t see why Thayer sued Furie other than because he doesn't understand that Furie wasn't involved in the auction.”
When reached for comment, Furie’s lawyers agreed. Even though he’s named as a co-defendant in the lawsuit, Chain/Saw and his lawyers maintain that Furie simply drew the pictures.
“Matt is actually not involved in any of the posts or anything else that are the subject of the complaint,” Louis Tompros, one of the intellectual property lawyers at the law firm WilmerHale who has long represented Furie, told Motherboard. “Not sure why his name was on there in the first place. I suspect because he’s the guy who drew the underlying things, but he’s not involved with any of the claims, the business, or the rest of it…It doesn’t seem like the kind of thing that has much merit.”
Tompros has represented Furie for years now in bleeding-edge court cases that are defining the nature of copyright in the digital age. But NFTs are still new for him.
“We are in a world where copyright is many years behind the art world and the movie world and the media world in general,” he said. “But now that world is accelerating into this technological space where it's moving at an exponentially faster rate. As a result, copyright law and trademark law and publicity law and contract law falls further and further behind.”