Coachella NFTs Now Stuck On FTX

FTX customers around the world have assets frozen on the cryptocurrency exchange. This happened after its sudden collapse last week. Apparently, this freeze is to the tune of billions of dollars’ worth in total. And it’s not just cryptocurrency or DeFi tokens either—some users have NFTs stuck in FTX, too.

NFTs Stuck In The FTX Saga

Discord servers tied to projects that launched via the FTX NFTs platform over the last year are now filling up with complaints from users who cannot withdraw their Solana-based assets from the FTX account wallet.

In some cases, even those who transferred their NFTs to external, self-custody wallets now can’t see the NFT artwork. This, however, is due to apparent FTX server issues. Links to many of the projects launched through the FTX NFTs marketplace are likewise now broken. FTX announced on Friday that it had filed for Chapter 11 bankruptcy protection.

Furthermore, the affected projects include major music and sports brands. This includes concert festivals Coachella and Tomorrowland, NBA star Steph Curry’s 2974 NFT collection, and Formula One-themed NFTs.

What Exactly Happened

Coachella announced its partnership with FTX US in February, and its plan to release 10 lifetime festival passe. This happened as NFTs was hailed by some as a step forward for mainstream Web3 adoption. And not to mention real-world utility for such digital assets.

The festival released various other NFT collectibles alongside the passes. Billboard, which first reported issues around the NFTs on Tuesday, made a statement. It said that the sale generated $1.5 million in total.

Now, however, users in Coachella’s Discord server are reporting that they cannot transfer their NFTs out from their FTX wallets. Others say that the Coachella NFTs held in their self-custody wallets aren’t displaying artwork. Discord moderators have said that it’s apparently due to FTX’s server being down.

We do not currently have any lines of communication with the FTX team,” a Coachella server administrator wrote on Friday. “We have assembled an internal team to come up with solutions based on the tools we have access to. Our priority is getting Coachella NFTs off of FTX, which appears to be disabled at the moment.”

In a statement today, Coachella Innovation Lead Sam Schoonover affirmed that the festival is trying to respond for NFT holders. “We’re actively working on solutions and are confident we’ll be able to protect the interests of Coachella’s NFT holders,” he wrote.

Custodial Concerns Over FTX NFTs

Unlike many NFT marketplaces, FTX NFTs was a custodial platform which means that it held purchased NFTs for buyers. The only exception is if they opted to transfer it to an external wallet. 

Also, given that FTX’s partners were major mainstream brands, it may have served more casual buyers. Buyers that didn’t bother to transfer the assets to self-custody wallets.

On top of assets initially sold through the FTX NFTs platform, there is a change. Now, anyone trying to sell another supported NFT through the marketplace would have to give FTX custody first. 

Currently, those NFTs are stuck on the platform as the firm begins bankruptcy proceedings.

Metaplex, the creator of Solana’s NFT protocol, worked with concert festival Tomorrowland. Their job was to develop its first NFT drop on FTX NFTs earlier this year. 

Furthermore, CEO Stephen Hess said that the situation illustrates the risks involved with centralized, custodial marketplaces. Especially as users currently have no way of accessing their purchased assets on the platform.

Hess said… “We hope this serves as a wake-up call to NFT collectors and creators that escrow-based marketplaces present significant risks.