In the first week of GameStop's recently launched NFT marketplace, the NiFTy Arcade collection stood out from the pack. Instead of offering basic JPEGs, the collection provided "interactive NFTs" linked to HTML5 games that were fully playable from an owner's crypto wallet (or from the GameStop Marketplace page itself).
There was only one problem: Many of those NFT games were being minted and sold without their creators' permission, much less any arrangement for the creators to share in any crypto profits.
While the man behind NiFTy Arcade has since been suspended from GameStop's NFT marketplace, he's still holding on to the tens of thousands of dollars in cryptocurrency he made by selling those NFTs before the suspension. And while the NFTs in question are no longer listed on the GameStop NFT marketplace, the unlicensed games themselves can still be accessed on GameStop's servers and across a blockchain-based file storage system, where they may now be functionally impossible to remove.
What if an arcade, but with NFTs?
NiFTy Arcade creator Nathan Ello told Ars his collection grew out of a desire "to highlight potential use cases for NFTs beyond static images." But Ello got a bit abstract when asked to explain the utility of freshly minted NFT versions of games that were already freely playable elsewhere on the web.
"If people find value in these NFTs, that’s a bonus, but my intent is to create and showcase games that are playable within NFT marketplaces and within NFT wallets," he told Ars. "Should someone want the convenience of playing the game directly from their wallet or their own profile page on the marketplace without having to navigate to mine, then they’re welcome to buy a copy."
Ello ended up selling hundreds of NFTs based on the NiFTy Arcade collection's first three games, making at least 46.7 ETH (worth about $55,000 at the time) from those sales as of July 15. But for at least two of those games—Worm Nom Nom and Galactic Wars—Ello admitted he never sought the necessary permission from the original creators before selling them. There's also evidence that Ello minted and distributed a number of other games through NFT marketplaces without the creators’ permission, including Breakout Hero, Super Disc Box, and Invader Overload, according to Joseph "Lexaloffle" White, the creator of the PICO-8 pixel game engine.
Whose license is it, anyway?
Ello told Ars that he tried to set up his NiFTy Arcade by "find[ing] open source game repositories approved for commercial use." But it seems that he wasn't very careful about this approval process. Worm Nom Nom, for instance, is clearly listed on itch.io with a Creative Commons asset license that prohibits commercial usage. Super Disc Box is likewise listed on the Lexaloffle website with a similar noncommercial license.
Then there are the licensing issues with the PICO-8 engine, which powers all of the games mentioned so far (and many more). "PICO-8's license agreement does not allow use when author permission is not granted," White told Ars.
Ello claimed that at least some of these licensing issues were honest mistakes. He argued on Twitter, for instance, that Galactic Wars was listed on itch.io with an "Unlicense" tag that suggested a public domain release. And while the game's assets are now listed on that page under a noncommercial Creative Commons license, archived copies of the itch.io listing didn't contain that asset license warning.
— NiFTy Arcade (@NiftyArcade) July 15, 2022
But White said he doesn't buy the argument that Ello was just being careless. "It would be easier to accept [Galactic Wars] as an honest mistake if not for Nifty's stubborn response and history of minting other PICO-8 games that had even clearer noncommercial licensing," White told Ars.
He just took my game and sold it... If you want to profit from my work, I think you should at least ask.Galactic Wars creator Borja de Tena
"This person didn't contact me to ask me anything. He just took my game and sold it," Madrid-based Galactic Wars creator Borja "Volcano Bytes" de Tena told Ars. "If you want to profit from my work, I think you should at least ask."
Only after getting pushback from the creators (and others in the PICO-8 community) did Ello say he "offered 100% of the primary-market (B2C) proceeds from each of the original NFT sales to the original developers of those games." But that kind of after-the-fact profit-sharing offer was pretty insulting to some developers.
"My work was sold for profit without my consent," Warsaw, Poland-based Breakout Hero developer Krystian Majewski told Ars. "Even if somebody wanted to return the money they made off of my work, it would be in the form of some shitty Crypto anyway."
The undeletable NFT
In any case, Ello said his minting privileges on the GameStop NFT marketplace have been suspended "until I have resolved the IP issues related to my initial collection." Trying to access Ello's creator page or any other NiFTy Arcade content on the GameStop NFT marketplace website currently returns an error page.
While NiFTy Arcade's existence has been effectively scrubbed from the marketplace, the hundreds of NFTs Ello already minted and sold before his suspension still exist on the Loopring Ethereum Level 2 blockchain that GameStop uses to track NFT ownership. That means those NFTs can still be sold or traded on other marketplaces, even if GameStop's own marketplace no longer considers them legitimate.
What's more, the games those NFTs point to are still live on GameStop's "gstop-content.com" servers, which the company uses to host cached copies of the content minted on its marketplace. That means a user with the right link can still get GameStop's servers to provide a playable, unlicensed copy of the PICO-8 games discussed above, all without the approval of those games' creators. It also means that users who own a NiFTy Arcade NFT can still play those games directly in their crypto wallets through GameStop's servers.
Ello's NFTs have also helped spread these unlicensed games well beyond GameStop's servers. That's because GameStop makes use of the Interplanetary File System (IPFS) standard, which uses the blockchain to distribute copies of uploaded files across multiple server nodes.
So even if GameStop deletes its directly hosted copy of these games, a user with a specific IPFS file hash (like the ones listed in the extant Loopring tokens) can theoretically access an identical copy hosted on some other active IPFS node. Thus, an IPFS link could continue to point to an unauthorized copy of Galactic Wars hosted somewhere on the IPFS network, even if GameStop removes its own copy from its servers.
At the very least, there should be a reliable and painless content takedown process, but in my experience, GameStop isn't even offering that.PICO-8 creator Joseph White
While GameStop hasn't responded to a request for comment from Ars, White said that "GameStop's messaging to customers, and it seems NFT holders' understanding, is that the content cannot be removed because it's up on IPFS and the blockchain." That said, he noted that GameStop could still remove the unlicensed content from its own IPFS gateway and/or update the GameStop wallet to hide content that breaks the company's rules.
White said he's "100% focused on getting [unauthorized] games delisted" from GameStop's servers and has filed DMCA takedown requests to that effect with no response thus far. He said he'd also like GameStop to set up some sort of screening process for newly minted NFTs on its marketplace to prevent seemingly irreversible problems like this from happening in the future.
"But that's not going to happen if it isn't legally required," White said. "At the very least, there should be a reliable and painless content takedown process. But in my experience, GameStop isn't even offering that."
A fresh start?
Ello said he's working with GameStop to get his minting privileges reinstated. In the meantime, he has already relaunched NiFTy Arcade on the LoopExchange blockchain marketplace with a new set of games he says have licenses and profit-sharing arrangements that "have been negotiated on a game-by-game basis."
Ello added that going forward, he "will not resume minting interactive NFT games until I’ve ensured those games are in proper compliance with all terms of service of the NFT marketplace." That includes "honor[ing] the wishes" of the already affected PICO-8 developers and "keep[ing] their games off the marketplace indefinitely," he said.
Attorney Jonathan Loiterman, who said he is representing at least one affected PICO-8 developer, told Ars that "discussions with [Ello]'s legal counsel are ongoing. I'm cautiously optimistic we can reach a mutually satisfactory understanding."
For customers who bought unauthorized game NFTs that can no longer be traded on GameStop's marketplace, Ello said he's "considering" either offering a buy-back program for the NFTs' original "initial primary market sale price" or air-dropping new, authorized game NFTs into affected customers' wallets.
A matter of principle
For some of the developers unknowingly caught up in Ello's NFT project, it's the principle of their games being distributed without permission that matters more than any financial upside they might have missed out on.
"I've been working on video games for years, but VolcanoBytes is not something I do for money," de Tena told Ars. "It's my personal project... something I do mainly for love, my income is not that of a real business. But that's my work, and [it] shouldn't be exploited by anyone without my permission."
This is where the real maliciousness of NFT projects like this lies. It's all 'exploit first, ask questions later.'Breakout Hero developer Krystian Majewski
"I am a small developer doing noncommercial projects to teach people how to make their own games," Majewski added. "NFTs are a net loss for me even if I don't participate. It's just another tax on my time and energy."
And while developers told me that Ello deserves blame for using their content without permission, they also point to GameStop for "creat[ing] a platform and incentive structures for this kind of predatory practice," as Majewski put it. "Empowerment of the creators was never the goal because, as we can see, no thought was given to any effective protection mechanisms or support services."
"The platform should assume their responsibility, too," de Tena said. "They could have any verification process, but they just want their money and commissions or revenue shares, I guess... 'Power to the creators' is fake."
"It's a disgrace, obviously. But at the same time, it is par for the course for NFT projects, isn't it?" Majewski continued. "That's what the tech is for: to defer and eschew responsibility. This is where the real maliciousness of NFT projects like this lies. It's all 'exploit first, ask questions later.'"