A Hamilton man’s 3D art scheme which raked in more than $100 million but delivered “comically bad” results has caused an online storm.
Tucked away in the rumpus room of his parents’ house in the upper middle-class suburb of Rototuna, 20-year-old Martin van Blerk sold the digital investing world a dream – a fantastical universe called Pixelmon.
Pixelmon was pitched as a home for people to buy and collect the digital trading assets known as NFTs, or non-fungible tokens.
In layman’s terms, non-fungible means it is unique and cannot be replaced, and the buyer owns a unique piece of code as an asset.
Under the internet handle Syber, van Blerk showed off concept art and a short demo of Pixelmon in late 2021. He also promised exclusive access to games and events.
It looked like a top-tier product, investor Sam* said. He thought investing in Pixelmon was a sure thing and he would make a lot of money. Everyone 1News spoke to knew that, like all investments, this was a risk.
“I thought that this project was going to do well, because everyone thought so,” he said
The auction price for these digital assets – 3D model characters – was high by NFT standards. Each NFT was priced at three Ethereum (ETH) – the cryptocurrency used for trading NFTs, each one worth roughly $4800.
Van Blerk sold about 7750 Pixelmon NFTs in a Dutch auction, meaning that every 10 minutes the price dropped by 0.1 ETH.
But there was a lot of hype around Pixelmon and they sold out very quickly.
“Everyone was saying ‘yeah, it’s going to sell out’,” Brad*, another investor said. “And it did. In 10 minutes, they made US$70m.”
The big reveal
It is common in the NFT world to buy before the art is revealed, so when Brad bought his NFT all he saw was a placeholder picture of an egg. Brad had seen van Blerk’s 3D mock-ups and was not worried.
When the egg hatched on February 26, he was “super-excited”. But that soon turned to disappointment.
“It literally looked like something from Microsoft Paint. It was so comically bad that anyone in their right mind would look at that and say that you can’t release that.
“He delivered nothing like the promises he made to us. I lost as**tload of money,” Sam added, having paid US$9000 for the Pixelmon NFTs.
“And that’s when, like, s**t, like hit the fan,” Brad said.
Outraged fans of the project quickly discovered van Blerk had spent hundreds of ETH on NFTs for himself and traded some for $1.3m cash -funded by the ETH paid to him for Pixelmon.
Then internet sleuths discovered the 3D images van Blerk had used for the concept art were a mixture of stock images and images created by an artist who had no idea his work was going to be used for NFTs.
Van Blerk went into crisis mode, hosting a two-hour meeting in a private Discord group – a social media app.
He came out swinging with apologies and excuses. He apologised on behalf of himself and the Pixelmon team.
“We have no ill-intention. It’s been a very difficult time for myself and the team, we have been receiving countless death threats in real life and on Twitter.”
He was then quizzed on where the money he’d raised was going and auction he had purchased a large number of NFTs after the: “I apologise for that and how it looked”.
When some investors asked for their share of the millions invested into Pixelmon be returned, van Blerk quickly shut down any consideration that would happen.
“Unfortunately that isn’t possible. To put it simply, we are sorry. This is unacceptable.
“We felt pressured to push reveal, and the reality is we weren’t ready to push the artwork. This does not represent the brand, and we will fix this as we have let many people down with this reveal.”
Van Blerk admitted he hired an artist to work on them for less than the price of a single Pixelmon, without telling the artists it was for NFTs.
‘Fast cash grab’
This is not the first time he’s sought money via an online platform and had people claiming he is under-delivered. He raised $74,000 on Kickstarter for a card game called Psycho Chicken. There are hundreds of comments on the Kickstarter project saying they haven’t received the product and pleading for a refund or an update.
The last update van Blerk provided was in June 2021 titled: ‘A quick update for anyone who’s [sic] order has been messed around with by Covid-19.’
“Although we have mentioned that we will be sending out orders again in late 2021, we thought we’d just let you know that’s still the plan in case anyone wasn’t sure. We truly are sorry for the long delay. a very difficult time for us and we are doing our best to recuperate and get back up on our feet. Thank you for your patience!”
He denies scamming anyone via Kickstarter. He told 1News he fulfilled more than 95% of orders but Covid impacts on shipping resulted in missing or damaged items, which he would attempt to rectify.
Twitter user @NFTherder investigated Pixelmon.
“He has this history of setting up businesses and then making promises and not delivering on those promises… now he’s done it in a way that is actually negatively affecting a lot of people worldwide,” he told 1News.
“He made promises that definitely did not match the reality of the project.
“I think he just saw a fast cash grab. And the best thing to highlight is the fact that he made huge promises upfront… and he used NFTs effectively as a Kickstarter for a game he wants to make.”
Everyone 1News spoke to for this story demanded refunds and urged victims all over the world to approach New Zealand authorities.
New Zealand victims received death reports. 1News understands these were not by van Blerk himself.
“I started getting DMs on Twitter where people would be like, ‘I know that you live in so and so… I know you’re from so and so’, and ‘if you want to keep talking about the floor price going down, I’ll put you down in the ground’,” Sam said.
‘”We’re not talking about like $1 or $2m, we’re talking about US$70m,” Brad said.
“The review was botched. Everything was botched. He has not done a good job at all. He should definitely be punished for this.”
The Commerce Commission, despite telling enraged investors on Twitter to make a complaint, has yet to receive any and has not started investigating van Blerk.
‘I’m not going anywhere’
1News put these claims to van Blerk and asked for an on-camera interview. He responded with a statement.
“I would normally be more inclined to do an actual interview but right now I fear for my safety and I don’t feel comfortable going on television just yet. those, I have had several credible death threats and need to take seriously.”
He said from his perspective, the project was still “on track”.
“We released some art that didn’t meet expectations and we are now taking action to prepare updated and upgraded artwork to better reflect this project’s scope.
“I never in my wildest dreams imagined this Kiwi project would become as popular as it has.
“As for refunds, we are currently three weeks into our roadmap and actively working on delivering our vision to the community. Our NFT was sold in a Dutch auction, which allowed our holders to choose the price they felt reflected the project’s potential,” he said.
“If a holder decides to sell their NFT for less than they initially paid, that is out of our control.”
He noted some of the NFTs – which have become an online meme due to their poor quality – were now worth tens of thousands of dollars.
‘”I also want to stress that I’m not going anywhere. I’m going to see this through to the end.”
*Victims names have been changed as they spoke to 1News on the condition of anonymity.