More than 19,800 CloneX digital avatars developed by non-fungible token firm RTFKT Studios have reappeared after Cloudflare blacked out the NFTs for apparently violating its terms of service.

“This content has been restricted. Using Cloudflare’s basic service in this manner is a violation of the Terms of Service. Please visit cfl.re/tos to learn more,” the message read on April 24.

RTFKT’s head of tech, Samuel Cardillo, has refuted claims that it missed a payment, attributing the issue to changes happening with RTFKT’s “current Cloudflare setup.”

NFT content creator Wale Swoosh earlier speculated that RTFKT may have subscribed to an inadequate Cloudflare plan for high-traffic image serving. Cloudflare offers a range of web infrastructure services.

Source: Wale Swoosh

Most of the CloneX NFTs have started to reappear, according to Cardillo, who added that Cloudflare has fixed the issue.

However, the incident sparked considerable outrage from some CloneX holders, including one NFT holder who spent $1.25 million on a CloneX NFT.

Source: mOpO680

The issue prompted Cardillo to find a more decentralized solution to host the NFTs.

“I am working closely with ArDrive to decentralize both CloneX and Animus to ensure that post-30 April, no downtime of your favorite art ever happen again.”

In a separate post, Cardillo said CloneX would specifically move to the decentralized data storage platform Arweave.

Cardillo is RTFKT’s last man standing since the firm shuttered in January

RTFKT — which pioneered virtual sneakers and was bought out by Nike in December 2021 — has largely been a one-man show since the shoe maker shuttered its operations in January.

“Keep in mind that I am the last man standing and therefore I am doing it all myself,” Cardillo said in response to a flood of complaints shortly after the incident occurred.

RTFKT confirmed its closure with an ambiguous letter, claiming it “isn’t ending” and would become what it has always meant to be — an “artifact of cultural revolution.”

No substantial developments at RTFKT have come about since the December announcement.

Related: Polygon NFTs overtake Ethereum collectibles in 7-day sales

Several NFT marketplaces have also shuttered in recent months.

DraftKings, GameStop and crypto exchange Bybit all closed their NFT marketplaces, with Bybit citing falling NFT trading volumes in its April 8 announcement.

X2Y2 also recently announced that its NFT marketplace would shut down on April 30 as the firm looks to pivot into artificial intelligence.

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The US Securities and Exchange Commission is looking to drop its unregistered securities lawsuit against blockchain firm Dragonchain in the agency’s latest crypto-related backdown. 

In a joint stipulation filed with Dragonchain on April 24 in a Seattle federal court, the SEC said it “believes the dismissal of this case is appropriate,” citing the work of the agency’s Crypto Task Force in helping “develop the regulatory framework for crypto assets.”

“The Commission and the Defendants stipulate that this Litigation be dismissed with prejudice […] and without costs or fees to either party,” the filing reads.

The SEC sued Dragonchain, Inc.; its backer, the Dragonchain Foundation; The Dragon Company; and Dragonchain’s founder, Joseph Roets, in August 2024, claiming they raised $16.5 million through a crypto token that was an unregistered securities offering.

According to the SEC, the Dragonchain (DRGN) tokens raised $14 million in an August 2017 presale and an initial coin offering (ICO) that ran in October and November of that year. At the time, it said the company needed to register as the tokens were investment contracts under securities laws. 

The SEC said a further $2.5 million worth of DRGN was sold between 2019 and 2022, which it alleged was used to cover business expenses and develop the firm’s tech. 

The suit was stayed in October after Dragonchain made a settlement offer to the SEC, which was extended in January after the agency said the case should remain paused due to US President Donald Trump’s sweeping executive order earlier that month calling for the country’s “leadership in digital assets.”

Meanwhile, the DRGN token has jumped 95% over the past day to over 8.5 cents on news of the SEC’s planned dismissal, but it’s still down around 98.5% from its $5.46 peak in January 2018, according to CoinGecko.

Dragonchain’s token jumped after the SEC filed to dismiss its lawsuit. Source: CoinGecko

SEC backs off crypto under Trump

It’s the latest case involving crypto that the SEC has abandoned under the Trump administration.

The SEC spun up a Crypto Task Force in January, the day after Trump re-entered the White House, to lead the regulator’s engagement with the crypto industry.

Related: SEC task force met with Trump-supporting firms to discuss crypto regulation 

An agency memo shows its task force met with Dragonchain representatives on March 24 to discuss how the SEC should approach handling crypto.

The SEC has also dismissed some of its most high-profile lawsuits against crypto firms, including its actions against Coinbase, Ripple and Kraken.

It’s also dropped investigations into other crypto firms, including OpenSea, Crypto.com and Immutable, with no further action planned.

Magazine: SEC’s U-turn on crypto leaves key questions unanswered 

Key Takeaways

Bitcoin Standard author Saifedean Ammous says that even if one entity owned a huge amount of Bitcoin, it wouldn’t hurt the protocol

Ammous reiterated major companies like BlackRock and Strategy don’t own the Bitcoin they hold since it belongs to the investors

Ammous said if these companies ever abused their position, people would likely pull their money and invest somewhere else.

Michael Saylor’s Strategy hypothetically hoarding nearly 48% of Bitcoin’s total supply wouldn’t pose any risk to the Bitcoin protocol or its price, says Bitcoin Standard author Saifedean Ammous.

“If Michael Saylor ends up with 10 million Bitcoin, what is he going to do? He’s likely just going to leverage them to buy more Bitcoin,” Ammous said during an April 25 interview with crypto entrepreneur Anthony Pompliano.

Ammous dismisses Bitcoin hoarders posing risks

“Ultimately, I don’t see how it would threaten the protocol in the serious sense,” Ammous said.

Ammous said if Saylor managed to accumulate 10 million Bitcoin (BTC), he would be unlikely to “wake up one day and say let’s try and hard fork this so we can make another 5 million Bitcoin supply so that I can have 15.” He reiterated it would diminish the value of his existing 10 million Bitcoin.

Bitcoin is trading at $93,250 at the time of publication. Source: CoinMarketCap

Several crypto market participants have previously raised concerns about Bitcoin whales and at what point their holdings could lead to risks like market manipulation, centralization, or liquidity issues.

At the time of publication, Saylor’s firm Strategy holds 538,200 Bitcoin, worth approximately $50.18 billion, according to Saylor Tracker. Meanwhile, the BlackRock iShares spot Bitcoin ETF has net assets worth $54.48 billion, which equates to roughly 585,000 Bitcoin, according to BlackRock data.

Strategy paid an average of $67,793 per Bitcoin. Source: Saylor Tracker

Collectively, the two firms hold approximately 5.3% of the total Bitcoin supply. However, Ammous said this is not a cause for concern.

“It’s not like Michael Saylor or Larry Fink owns all those Bitcoins. They have shareholders who own all those Bitcoins, or ETF holders that own those Bitcoins.”

“To the extent that BlackRock and Strategy hold those, they hold those because they are doing their fiduciary share of duties to their shareholders and the ETF holders in a satisfactory way,” Ammous added.

Related: ARK Invest ups its 2030 Bitcoin bull case prediction to $2.4M

Ammous explained that if BlackRock or Strategy ever started to manage their holdings in a way that’s harmful to shareholders or ETF holders, or starts abusing their position, that’s when investors would sell and look for other ways to gain exposure to Bitcoin.

On April 24, Cointelegraph reported that Twenty One Capital, a new Bitcoin treasury company led by Strike founder Jack Mallers with the support of Tether, SoftBank and Cantor Fitzgerald, is looking to supplant Strategy to become the “superior vehicle for investors seeking capital-efficient Bitcoin exposure.”

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.