Metakovan, the mystery Beeple art buyer, and his NFT/DeFi scheme

Last week, a crypto whale going by the moniker “Metakovan” bought a Beeple artwork via Christie’s auction for $69 million—$60 million in ETH and $9 million in fees—outbidding a surprised Justin Sun, founder of the Tron blockchain, in the last minute.

After the barest amount of digging, I am going to hazard a guess that the mystery Beeple buyer is Vignesh Sundaresan, a crypto entrepreneur who has been in the crypto landscape for about seven years.

It’s pretty obvious, really. Metakovan has given a few audio interviews. And if you compare those to previous Sundaresan interviews, like this one, it’s the same voice—and the same crypto origin story.

In a recent interview with the Good Time Show, for instance, Metakovan says he got into crypto in 2013, lived in Canada for several years, and then left for Singapore in 2017 because crypto regulations in North America were too “unclear.” That’s basically Sundaresan’s background as well.

Putting aside the matter of why Sundaresan would want to keep his real identity cloaked in the first place, the next question is the grift—how is he spinning a profit off of non-fungible tokens, or NFTs?

I’ll get to that in a moment, but first…

Who is Sundaresan?

According to the bio on his website, Vignesh Sundaresan is behind several crypto startups.

He co-founded BitAccess, an early bitcoin ATM company in Canada. BitAccess was accepted into the Y Combinator startup accelerator in June 2014, according to Coindesk. 

And then, in January 2017, he founded the Singapore-based Lendroid Foundation. The firm raised $47.5 million (50,000 ETH) in a two-day initial coin offering in February 2018, according to CryptoRank. 

He also founded consulting firm Portkey Technologies and claims to have backed several popular crypto projects, including Ethereum, Polkadot, Dfinity, Omisego and Decentraland.

Going back further, Sundaresan launched crypto exchange Coins-e in Ontario in 2013. (Coincidentally, the same year that Gerald Cotten and Michael Patryn launched their failed Canadian crypto exchange QuadrigaCX.)

Coins-e, a defunct Canadian exchange

Several Coins-e users have taken to social media to complain about losing money on Coins-e, calling it a scam and warning others to watch out. (See Reddit—here and here—and BitcoinTalk.)

The posts on r/dogecoin are the most alarming. Coins-e clients report having their dogecoin disappear. Wireguysny described watching 1.3 million DOGE evaporate and the frustration of being unable to reach tech support to get to the bottom of the matter.

Xclusive2 wrote: “I’ve had just about enough of of Coins-e millions of coins missing, no reply from support ever! the reason is because it’s a one man operation. the problem is this joker is stealing and trading everyone’s coins when and how he feels to make himself rich he knows that Doge is worth a lot of BTC in large volumes.”

Sundaresan denies being the guy who allegedly ripped people off. According to him, Coins-e was sold to a company called Casa Crypto in Waterloo. The transfer was overseen by law firm LaBarge Weinstein, he claims.

“Since it was sold, I have not been associated with Coins-E. Allegations of a scam are FUD,” he told me.

I am so far unable to confirm that sale. I can’t find any announcement or press release on the sale. The Coins-e website no longer exists, and an archive of the site’s “About” page from 2016 doesn’t reveal who is behind the operation. I can’t find a company called “Casa Crypto” in Waterloo either.

Sundaresan offered to show me proof of the sale via a video call. I told him I was open to that, but he hasn’t gotten back to me to set up a time—and referred me instead to his comms person. He did not comment on whether he was Metakovan.

Meanwhile, I’ve looked up the domain registration for Coins-e.com. The site was registered in May 2013 and the only update was in May 2020—after customers complained about their coins vanishing.

The site was originally registered to Ramesh Vinayagam—the name of a famous Indian composer, per Reddit user xclusive2—so perhaps another alias? And, according to a Paste from January 2014, the site was registered to the man himself shortly before the registration was made private and Sundaresan entered the Y Combinator program.

The NFT connection

NFTs are the big thing now. They took over as the latest grift when decentralized finance, or DeFi, ran out of steam last year. Fellow nocoiner David Gerard wrote a blog post explaining the nature of NFTs and why digital ownership of art is utter nonsense.

“NFTs are entirely for the benefit of the crypto grifters,” he writes. “The only purpose the artists serve is as aspiring suckers to pump the concept of crypto — and, of course, to buy cryptocurrency to pay for ‘minting’ NFTs. Sometimes the artist gets some crumbs to keep them pumping the concept of crypto.”

Stepping back, we first see the connection between Sundaresan’s startup Lendroid and NFTs in a blog post titled “Why DeFi Needs NFTs.” The post, written by his business partner Anand Venkateswaran, describes how NFTs magically solve the problems of DeFi, such as flash crashes, volatility, and governance. (Venkateswaran, who is the comms person, also has a pseudonym—he goes by Twobadour Pannar.)

Lendroid powers WhaleStreet, an Ethereum-based platform for token swaps. You would use it if you wanted to trade ETH for another ERC-20 token. WhaleStreet has its own native “yield-farming token” called Shrimp, which you need to acquire before you can purchase other DeFi tokens on the platform.

Metakovan is also behind Singapore-based Metapurse, a crypto-based investment firm. Metapurse’s mission, according to its website, is to “democratize access and ownership to artwork.” The firm is hard at work acquiring NFTs. It purchased Beeple’s “Everdays: 20 Collection” artworks for $2.2 million in December.

Metapurse has taken these Beeple artworks, or NFTs, along with three virtual museums, and combined everything into a “massive bundle.” Would you like to invest in this wonderful package? You can. All you have to do is buy B20 tokens.

This blog post on the Metapurse substack lays out the grand plan:

“We believe we truly achieved this with B.20 — the name of a massive NFT bundle we are fractionalizing so that everyone can have ownership over the first large scale public art project within the metaverse. It is important to note that we’re fractionalizing ownership, not the assets themselves. These fractions will be available as 10 million B.20 tokens, and can be referred to as the “keys” to this digital vault.”

Number go up

At the end of the day, the name of this game is “number go up.” This is about pumping B20, so holders and Metapurse can benefit when they go to sell the token—e.g., get more ETH, buy more NFTs, rinse, repeat.

The token distribution is something to pay attention to. Metakovan has 59% of all the B20 tokens. Why does he own the majority of tokens? As he explains it, it’s to prevent any one person from owning more than half of B20 tokens—and snatching up all this wonderful artwork for themselves. The idea is to decentralize and democratize art, only Metakovan controls the token supply.

What’s interesting is that Beeple, the creator of the artwork, is actually a business partner of Metakovan’s. He owns 2% of all the B20 tokens. I’m sure there is no conflict of interest here.

WhaleStreet hosted the B20 sale on Jan. 23. Apparently, 1.6 million B20 tokens were sold to the public for $0.36 per token. After the Christie’s auction, B20 shot up to $23. It’s now down to around $16, according to Coinmarketcap. That’s a nice profit for anyone who got in early—and worth over $3 million for Beeple, if he dumps his coins quickly and there’s enough liquidity to actually sell them.

At the end of the day, this is a straight-up initial coin offering-style index fund to speculate on NFTs, with a twist: Metakovan owns most of the tokens—and he has an existing business relationship with the artist.

I’m wondering—did Metakovan anticipate having to pay this much ETH to Beeple for his “Everydays: The First 5000 Days”? Metakovan knew he needed the artwork for his index fund. But did he expect Sun to keep bidding the price up to the very last second?

In an earlier version of this post, I wondered why we can’t see the blockchain transaction—which was supposed to be 42,329.453 ETH. If we can’t see the transaction, how do we know that Beeple actually got paid for the sale and is not in cahoots with Metakovan to make number go up? I now have a theory.

As Christie’s lays out in its conditions of sale document, the transaction needs to come directly from a digital wallet maintained with Coinbase Custody Trust, Coinbase, Fidelity Digital Assets Services, Gemini Trust Company or Paxos Trust Company. And it sounds like the funds may have gone into Christie’s escrow wallet.

If both parties were using Coinbase accounts, the exchange could just change the database records off-chain to flip account balances, and it wouldn’t show up on the blockchain. In this way, Coinbase acts like a second layer.

The other situation I pondered was: imagine if you were to artificially inflate the price of your NFT index fund by pretending to pay an artist for their art. And then you never actually paid the artist—who was your business partner—but the token inherited the fake value. Since Beeple likely has to pay taxes on the gains, I’m not sure this scenario would play out in his favor, so nix that theory.

Nevertheless, it’s a sweet deal for Beeple who can now pump crypto to his 1.8 million Instagram followers. And Metakovan gets plenty of publicity for his ICO project, so his own personal holdings rise in value.

The problem is there’s nothing to stop Metakovan from dumping his coins and leaving the party early if he wants. And you don’t really have ownership of actual art if you have B20 tokens. All you have is magic beans, whose value is whatever the next person is willing to pay you for them.

-------------------------

Since I published this article, Sundaresan has written to me and asked me to take it down. I refused, but agreed to make edits if he could point to anything specific that was wrong. He hasn’t yet.

I’m posting Sundaresan’s full comment on the matter below:

“Hello Amy, I am replying to address your concern about coins-e as relating to me. Definitely there are several factual inaccuracies in your blog post and your tweets. I would appreciate if you would temporarily pull down the posts until you have the facts right, as such a post causes unnecessary FUD and obviously it is your choice to not take it down. But if you do it will show that your intentions are in the right place and that you are looking to have a conversation. Regarding coins-e, it dates back to days when the crypto industry was very unorganized and the service itself was quite small and did not warrant a press release when the sale was done. The service was not even big enough to attract the crypto media attention, the service started growing bigger as the Casa crypto was taking over. The transfer happened through a well documented process with assistance from lawyers on both sides. Post the sale I had moved on to build Bitaccess, backed by YCombinator and I have had no link to Casa Crypto after the sale and I have repeatedly addressed this issue via newsletters and Q&As. For the other parts of your question, I believe it shall be better answered by contacting @metapurse and @twobadour directly.“