GameStop’s NFT Marketplace Under Fire In First Month

After a controversial NFT got taken down, another user published stolen games.

Just a month after launching, GameStop’s new NFT marketplace is in hot water for the second time—now for one of its publishers stealing other game developers’ work.

An NFT collection called NiFTy Arcade began selling on the GameStop platform shortly after its July 11 launch. When purchased, the buyer could play a virtual arcade game with a simple click-through from their NFT wallet. The problem was: The developer of the NFT collection had not gotten permission from the creators of the games he republished.

The sale of the collection sparked online outrage among indie developers, including the developer of the game engine from which many of the stolen games were built and the creators of those games themselves.

“This person didn't contact me to ask me anything. He just took my game and sold it,” Borja “Volcano Bytes” de Tena, the creator of Galactic Wars, told Ars Technica on Friday. “If you want to profit from my work, I think you should at least ask.”

NiFTy Arcade creator Nathan Ello also spoke to Ars Technica on Friday and defended his republishing of the games, stating that some of the sourcing licenses were less than clear. But Joseph “Lexaloffle” White, the creator of the PICO-8 engine behind the games, said that the engine’s use specifically states that the games may not be redistributed without the author’s permission.

Ello profited roughly 13.07 Etherum, worth about $22,370, with the sale, 8.4 ETH from his initial launch and a 10 percent cut of the resale, which equaled 4.67 ETH. Only after the backlash, Ello told Ars that he would offer the original creators 100 percent of the proceeds. 

Upon discovering the issue, GameStop suspended Ello’s minting privileges from the marketplace (each user with those privileges requires direct approval from GameStop staff). But the technology behind the GameStop marketplace may allow for people to find unlicensed versions of the game elsewhere on the Internet, continuing to cause damage to its original creators.

This is the second controversy for GameStop in its new marketplace.

When the platform launched, a user listed an NFT parody of the infamous “Falling Man” photo, captured on Sept. 11, 2001, of a man jumping from the upper floors of the North Tower of the World Trade Center. The NFT version manipulated the widely-criticized image of the man in the foreground to be an astronaut, but left the background of the North Tower almost fully intact. 

That NFT sold for .65 ETH (about $990 at the time). It took GameStop nearly two weeks to remove the photo around July 23, according to crypto critic Molly White. Like Ello, the creator of the “Falling Man” parody required GameStop staff approval before being able to mint new NFTs on the platform.

The company did not issue a public statement, but replied to a direct message of someone complaining about the bad-taste NFT. 

“This NFT will be removed from our marketplace entirely,” GameStop said in that direct message on Twitter. “This user has already had their minting ability removed from their account, and we have already been in direct contact with the creator about these actions.” 

The GameStop NFT marketplace is a hasty pivot for the one-time pinnacle of gamer culture. Moving away from its dying vertical of brick-and-mortar game stores, the company and its executives, including Chewy founder Ryan Cohen, whom the company brought in as chairman in January 2021 to help usher in a new direction. Instead of finding success, its new NFT marketplace feels like a hasty pivot—something the company has not yet figured out how to moderate.

Under Cohen, GameStop’s stock has risen exponentially in the past 18 months. On Dec. 31, 2020, the stock closed at $4.71 per share. It closed on Friday at $40.02 a share. 

The stock became the center of a wave of online retail trading in January 2021 after a series of users on the subreddit r/WallStreetBets noticed hedge funds shorting the stock. The stock spiked to over $500 during the saga, which has been or is being adapted into documentaries and scripted series and films by the likes of Netflix, HBO, Metro-Goldwyn Mayer and others. 

But it has not been all fun and games for GameStop’s finances. The company made massive layoffs in early July, although the specific number wasn’t disclosed. It also ousted its CFO in that process.