Friendsies 'Rug Pull' NFT Holders—Could the Community Take Over?

By Andrew Hayward

Friendsies, an Ethereum NFT project from long-running art duo FriendsWithYou, announced today that it would “pause” all future plans around the project after raising more than $5 million worth of ETH in last year’s mint. The team then apparently deleted their Twitter account shortly afterwards, leading to accusations of a "rug pull."

Now, some members of the community are proposing a plan to take over and continue running the project.

“As the project founders, we have decided that it would be best to put a pause on [Friendsies] and all future digital goods for the time being,” the since-deleted tweet thread read. 

FriendsWithYou, a collaboration between artists Samuel Borkson and Arturo Sandoval III, started in 2002 and has exhibited in many museums and galleries around the world. The project has also released toys and collaborated on a Netflix cartoon series. FriendsWithYou’s official website is also apparently down, as of this writing, although the Friendsies’ website is live.

Friendsies was launched last April via a Dutch auction mint that started at 3.33 ETH, or around $11,450 on the date of the mint. The price steadily declined over the course of the mint process for the 10,000 NFTs, but the mint ultimately generated $5.3 million worth of ETH, according to pseudonymous on-chain sleuth ZachXBT. It’s unclear if the funds were used, and if so, how.

Each original Friendsies avatar, which featured the duo’s colorful cartoonish style, served as an access pass into a community that was slated to provide holders a Tamagotchi-style digital pet game. Furthermore, the creators said that NFT holders would receive a share of the project’s creator royalties from secondary market sales. Apparently, none of that happened.

“We had the best intentions to make a true digital companion for the future,” the creators tweeted today. “The volatility and challenges of the market have made it very difficult to move this project forward in a way we can be proud of. For now, we have decided that it’s best to allow the space to further mature.”

Decrypt reached out to FriendsWithYou but did not immediately receive a response.

The community reacts

Satvik Sethi, former NFT product lead for Mastercard and now CEO of Web3 social app startup Joincircle, tweeted at FriendsWithYou today with an offer to help the community essentially take over the project from the original creators and keep it alive. Other Web3 founders, creators, and collectors have replied, volunteering to help Sethi execute on a new vision for Friendsies.

"I'll install a new team and take the project forward with a different vision," he wrote in the tweet thread, imploring FriendsWithYou to "do the right thing" and "don't abandon people who put their trust in you."

Sethi plans to send a formal pitch to the artists and try to find a path forward for a project that currently has NFT holders and supporters mired in uncertainty. He told Decrypt that he’s unsure whether the artists would consider such a pitch and give him and others a license to continue the project using the FriendsWithYou IP.

Because Ethereum NFTs are composable assets, other developers could potentially build apps and experiences to support the Friendsies NFTs, but likely would not be able to actively use the artists' IP without permission. Still, Sethi believes there’s enough momentum from fans and holders to revive the project and give it a second life.

“I felt like there was tremendous value behind the artwork and behind the community,” Sethi said. “There is a lot of potential to actually turn this around and use it in a cool new way.”

Sethi told Decrypt that the project founders had not made any announcements in the official Discord server since September ahead of today’s news, and apparently did not deliver on most of the promises around the project.

He said that the project creators are not currently active in the Discord server following the announcement. Instead, NFT holders are discussing potential paths forward amongst themselves, including ways to support community members or even pursue potential legal action over as-yet-unrealized promises.

Like many on Crypto Twitter today, Sethi described FriendsWithYou’s apparent move as a “rug” or “rug pull”—that is, that the creators pulled the rug out from under paying supporters by bailing on the project after making significant promises.

“Plans change, right? Even Proof canceled their conference,” Sethi told Decrypt. “People realize new visions—you communicate and then you pivot. But to say that we're just putting a pause to our plans and then delete the accounts and try to block all communication for it… that is a ‘rug,’ essentially. There is no better way to put it.”

Friendsies NFTs now start at just 0.025 ETH (about $42) on secondary marketplace OpenSea as of this writing. According to data from CryptoSlam, Friendsies has generated about $15 million worth of total trading volume to date. With a fixed 7.5% royalty fee attached to each NFT sale, that means Friendies earned another $1.125 million from those sales.

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