In January 2022, the NFT community was swept up by the release of the Azuki collection, a strikingly stylized pair of avatars that are equal parts The World Ends With You and Thrasher. In the months following its debut, it has gotten enough notice. At least according to some rating criteria, the Bored Ape Yacht Club's dominance in the NFT food chain is under threat.

However, Azuki creator Zagabond wrote a blog post on how his last three projects terminated before Azuki, jeopardizing all of that momentum. The first team eventually abandoned all of the concepts he detailed.

The announcement drew a lot of criticism from the NFT community. The price of an Azuki on OpenSea decreased from 19 ETH (about $44,600) to 10.2 ETH (approximately $23,000) after the post went public on Monday, May 9. Several members of the NFT community were understandably offended by what was said in the post, noting that Zagabond's several previous initiatives (Tendies, CryptoZunks, and CryptoPhunks) had committed the community's biggest fraud: the rug pull.

A rug pull is a criminal act in which crypto developers entice early investors and then abandon the project by either (1) stealing the money or (2) selling their pre-mined shares in an attempt to drain all funds from investors.

The allegations don't end there. On-chain data appeared to show the CryptoPhunks author executing an NFT "wash trade," according to a user going by the moniker hunk. A wash transaction occurs when someone buys and sells an NFT at the same time in order to artificially inflate its price. In traditional markets, it is prohibited. A profit of 300 Ethereum was made on the claimed CryptoPhunks wash trade. The project was thereafter completed.

So, why did Zagabond decide to reveal all of this now? Was he really just trying to share his knowledge and didn't consider that some might interpret his previous "failures" as rug pulls? We can't be certain. Many people in the NFT community believe that the information will be made public in the coming days as a result of on-chain investigation. These allegations, however, cannot be verified. As a result, it makes more sense to concentrate on what can be discussed: were these simply failed projects or rug pull scams?

Let's take a look at what each side has to say.

Is it a failed project or a rug pull?

Previous endeavors were framed by Zagabond as "failed projects" and learning experiences that led to the eventual success of the Azuki collection and community. "Despite the fact that NFTs have entered the mainstream, it's easy to forget how young the NFT space is." It is critical that the community encourages creators to innovate and experiment during these formative years. Furthermore, each experiment includes key takeaways.... "Azuki is based on lessons learned from CryptoPhunks and other projects, which taught me to lead rather than follow," he wrote in a blog post.

Zagabond denied the allegations, claiming that the projects failed because not enough people believed in them. "Do I wish they had more success?" Obviously. "At the end of the day, there was no product-market fit, but that doesn't mean it's a rug," he explained.

On May 10, Zagabond responded to the allegations in a Twitter space hosted by NFT community figure Andrew Wang. Throughout the space, he defended himself in a variety of ways. First, he claimed to have handed over some of the projects to the collection's owners. Second, he justified his actions by pointing out that there is no set set of rules for creators to follow. In short, he claimed that deciding what to do is difficult.

Finally, Zagabond has verbally committed to improving its communication and speaking with community members affected by failed projects in order to find solutions that will satisfy everyone. The creator stated that he would "explore these specific situations with community members moving forward over the next few weeks to make sure we're managing those expectations and figuring out what happened."

In Zagabond's case, the creator disabled Tendies' social media profiles and Discord servers. And how can a creator manage community expectations if he vanishes and no channels of communication exist? The same questions have been raised by members of the NFT community. An NFT enthusiast known as 2070 accused Azuki of "squeezing" the project with these actions, claiming that the project had ceased all activities shortly after its launch. Zagabond responded by saying that maintaining these platforms "gives people the impression that we'll still be doing more, but we're not."

Much of the discussion in the space followed the same pattern: community members raised issues, and Zagabond justified their actions. Managing these expectations, however, can be nearly impossible without appropriate communication channels.

Many NFT members were dissatisfied with Zagabond's handling of the various allegations. For starters, many believed he should at the very least apologize to those who had lost money. Others felt that, given Azuki's unexpected success, Zagabond should try to compensate those who had lost money on previous projects.

Zagabond eventually left the field partially unannounced due to controversy. We'll see if the Azuki project can maintain its momentum or if it fades into obscurity in the early stages of NFTs.

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