A Series Of Unfortunate Lawsuits

Wata sued for alleged market manipulation, and Nike claims StockX is selling fake sneakers

Cultured is a newsletter that gets readers up to speed on the most interesting things going on at the intersection of finance, art, collectibles, NFTs, and more. Cultured is produced by Otis, an alternative investment platform that was recently acquired by Public.com.

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🗞 STORIES OF THE DAY

A class action suit alleges that Wata Games is manipulating the market

• The suit claims that Wata has helped feed a frenzy for retro games, accumulating a massive backlog, and then charging customers if they want their graded games returned in a reasonable amount of time.

• Wata charges a commission on high-value games, as well as an additional fee to expedite grading. Since backlogs have stretched to up to 18 months for some games, collectors are often forced to pay to speed up processing.

• The lawsuit also accuses Wata and several other companies of ongoing market manipulation. A viral YouTube doc recently made similar claims, saying that Wata  pumped up the value of retro games by taking a highly subjective approach to grading.

Our Take: This lawsuit could undermine collectors’ faith in Wata.

Grading relies on trust in the grading company to give an accurate condition assessment. If these allegations about price fixing and intentional backlogs turn out to be true, it could seriously undermine Wata’s credibility in the industry. Even if they win the case, the claims alone will make some collectors feel uncertain about doing business with Wata in the future.

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Nike escalates counterfeit lawsuit against StockX

• The footwear company asked a judge to add claims of counterfeiting and false advertising to its existing copyright case against StockX. Nike says counterfeit sneakers proliferate on the platform, despite claims that it only sells authentic shoes.

• The original suit claimed that StockX was riding on Nike’s trademarks by selling digital versions of real-world Nike sneakers. Nike wants to add the new claims after allegedly buying 4 pairs of fake sneakers that were labeled as “Verified Authentic” on StockX.

• StockX fired back, saying that Nike had previously expressed faith in its authentication process. It added that the new claims were an attempt by Nike to salvage a lawsuit that looks increasingly unlikely to succeed.

Our Take: These claims couldn’t come at a worse time for StockX.

The platform is planning to go public in an attempt to ride the wave of interest in footwear and collectibles. It’s already been valued at $3.8 billion, meaning that investors are pretty excited for the deal. Nike’s original lawsuit didn’t have much of an impact beyond StockX’s NFT project, but these new claims hit at the heart of the platform’s service. If the claims turn out to be true, the results for StockX could be devastating. 

Here’s to hoping that this still means something…

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✨ AROUND THE INTERNET

• Start rooting through your parents’ closet because Certified Collectibles Group is now grading VHS tapes.

• Morgan Stanley told investors they should stay on alert about NFTs after Terra, a popular stablecoin, plummeted in value.

• Ernie Barnes’s The Sugar Shack became a surprise star at last week’s Christie’s sale when it sold for $15.3 million, over an estimate of $200,000. Here’s a bit more about it.

• For all the Oasis-heads out there, you have a rare chance to own the smashed up guitar from the band’s final night. Just be ready to shell out $405,000.

• The collection of billionaire real estate magnate Harry Macklowe and his ex-wife Linda sold for a record $922 million.

• If you’re in New York, you probably know that Frieze is going on this week. But there are a host of smaller fairs, too.

This year’s Frieze is taking place at The Shed, a venue I didn’t know actually had programming.