The Betrayal of Bright Moments
When 309 digital files went missing in August from the Bright Moments art gallery the question immediately arose: were they stolen?
Outside the Bright Moments gallery on Winward Ave. in Venice, CA
In the battle between a social contract and a smart contract, who wins?
Part 1
It was a typically beautiful summer morning in Venice, California as Seth Goldstein waited to eat breakfast at a local restaurant. Then the call came. The man on the other end agreed to meet Seth by the skate park in an hour, only a few steps from the art gallery Seth founded in 2021 in the heart of the Southern California beach town. Four days earlier, he’d woken up to discover that $4.3 million worth of digital art files belonging to the gallery were no longer where they were supposed to be. Were they simply missing, or had they been stolen? In either event, everything Seth had worked to achieve now seemed about to fall apart.
In an uncommon twist – and why Seth was willing to ditch brunch with his son Charlie – the man Seth believed had ripped him off wanted to meet, one-on-one, at the skate park.
This is the story of that meeting and the betrayal that made it necessary. It’s about community and the damage one disgruntled member can wreak. And it’s about one man’s relentless drive to keep his newest and most exciting success from being ruined by a traitor.
I’ll refer to the man Seth was meeting as Alleged aRt Theif, or Art for short. Art had allegedly been traced quite easily by Seth and his crew at the Bright Moments gallery. This is the world of blockchain technology where every transaction is recorded in a public ledger, and Art had been very sloppy in his getaway. The tracks he allegedly left only took a few hours to uncover. That’s because when blockchain transactions are involved it’s simple to follow a chain of actions — such as 309 digital files being stolen. Or were they simply moved? Art would probably argue the latter, making the case he did nothing wrong.
Unfortunately, Art declined to speak to me for this story and didn’t answer a list of questions I sent him by email and text. When I reached him on his cell phone, he hung up. Art hasn’t been accused of any crime or wrongdoing by any authorities that I’m aware of. With that in mind, I decided to shield his identity and let the story carry the day.
“It was incredibly vindictive what had been done to us, and what seemed to be done to me”
– Seth Goldstein
So what allegedly was stolen? Again, this is the forefront of digital art and commerce, and Art was accused of robbing the gallery of 309 digital files known as non-fungible tokens.
Think of these files, these NFTs, as any artwork you’d value in the traditional sense – from an Edward Hopper landscape to a shark decaying in formaldehyde by Damien Hirst to a sunset watercolor being sold at a local artists’ fair. That’s to say the beauty (and value) of NFTs sits squarely in the eye of the beholder; some are trash some are transcendental masterpieces.
Yet unlike a canvas or watercolor or piece created in any other traditional medium, NFTs are minted as digital files. They are at their essence code tethered to a blockchain. This means the thing that makes an NFT authentic is really part of the art itself. This also means, as I mentioned, that the chain of ownership of any NFT can always be tracked on a public ledger, but I’ll get into why that’s important later.
Crypto Venetian #556 which sold for $71,000 on Aug. 22
The NFTs in this case are called Crypto Venetians, pixelated profile pictures based on the hundreds of local characters that make Venice Venice.
Also known as PFPs, Seth first dreamed up Crypto Venetians with his team to bring in foot traffic to Bright Moments. They’d give the NFTs away, with one catch. You had to come to the gallery in person where your unique Crypto Venetian would be revealed. Seth would then simply give it to you and you could walk out the door. (Technically speaking the NFTs were minted and transferred to the recipient’s Ethereum wallet.)
They had done this already for 691 Crypto Venetians, of which only a thousand would ever be created. That’s not just an arbitrary number – well, okay, it is – but the supply of 1,000 Crypto Venetian was encoded within the smart contract that enabled the creation of the NFTs, so it could never be changed. While the project took a few weeks to catch on by July Seth had a waiting list thousands long to get a chance to nab the free digital swag. Bright Moments was on track to mint the 1,000 Crypto Venetians – then Art came along.
Perhaps this doesn’t seem like a huge deal, but in the spring and summer of 2021, the cryptocurrency world was awash in NFT fever. Crypto Punks, a better known close cousin to Crypto Venetians, were selling for millions of dollars each. The same was beginning to occur with a project known as Bored Ape Yacht Club. In March, the digital artist Beeple blew minds with his $69 million sale of an NFT called “Everydays: The First 5,000 Days.”
Beeple’s record-breaking NFT source: Christie’s
This was the fever, and it had spread to Venice. By early August Crypto Venetians were selling for as much as $25,000 in secondary markets.
“It was like a car dealership giving away 15 free cars a day,” Seth said. “It was absurd.”
Seth has had other successful ventures in the past, but his plan for Bright Moments had grown beyond anything he could’ve imagined. He found himself in a dark but exhilarated mood as he walked in the morning sunshine toward the skate park. The last few months had been trying for him in both personal and professional terms.
A serial entrepreneur, Seth co-founded a data privacy startup called Spartacus in January, 2021, yet now he was facing leadership trouble with his partner and he’d had to lay people off. Perhaps his highest profile venture dates to 2011 when he co-founded the beloved turntable.fm. Before that he’d co-created an Internet research firm aimed at Wall Street investors that sold to the brokerage and fintech company ITG for $56 million in 2010.
Going back even further, to a time when many of Seth’s fellow members of Bright Moments were still in diapers, he had built tech stock portfolios worth hundreds of millions of dollars for Flatiron Partners in New York City. Spoiler: When the dot com bubble burst it hit Seth right in the money bags — forever altering the idea of value for him as he watched $500,000,000 go to zero.
Seth had turned fifty-one the day before his meeting with Art, and that’s a time when any man will ponder his life and choices. He worried that the early success of Bright Moments was running away from him as people took advantage of free Crypto Venetians, soiling and forever changing the timbre and community-building spirit of the project. Then the theft occurred, effectively killing the Crypto Venetian experience.
Seth Goldstein
Seth comes across in person as intensely competitive, but he knows this about himself and is forever trying to tamp it down a bit. He can talk in paragraphs, and it’s easy to see why, with his levels of persuasion and storytelling, he’s been able to lead various groups of friends and strangers into one startup or another. On the short side, he keeps in shape by starting the day on the paddle tennis court near his house. He sports a Venice tan and has perpetual stubble. His favorite hat, which he wears often, says Lone Wolf.
As Seth walked toward the skate park that morning he knew, again, that he shared a good amount of the blame for the situation he found himself in, that he trusted people too much and that trust had come back to bite him in the ass.
The implications of what Art did run deeper than just Seth’s opinion. The Bright Moments crew compiled a 35-page review of the Crypto Venetians saga that they submitted to the Los Angeles Police Department. It explains the hops, skips and jumps Art made from one Ethereum blockchain address to another. It has a detailed history of Art’s legal minting of a Crypto Venetian on June 22 as a member of Bright Moments. Seth was previously aware of Art’s wallet address because it was required to become a member of Bright Moments, but more on that in part 2. Unlike cash, which can move thousands of miles undetected, say, in the trunk of a car, once an Ethereum address such as Art’s is linked to a real person, crypto or NFT transactions can be traced for everyone to see.
The report they gave to the LAPD also alleges that within hours of taking the NFTs, Art listed them on two secondary market sites, Open Sea and Rarible. He managed to sell at least three before the Bright Moments team convinced the market operators to blacklist the stolen Crypto Venetians, thereby freezing the action in mid-heist.
How the marketplace Art Blocks displayed one of the 309 Crypto Venetians
The way Seth had set up the structure of Bright Moments held a significant risk: Any insider could mint – and therefore own – any number of the Crypto Venetians that were waiting to be created. This is what Art is accused of doing. So Seth wasn’t surprised that it happened but the “profound arrogance” that a Bright Moments member would pull an inside job felt extremely personal.
“It’s like you’re having a birthday party and you have a bouncy castle,” Seth said. “One kid is upset so he puts a knife in the bouncy castle and all the air goes out and you’re like, ‘what the fuck?’” Seth said. “I’m sure you’re upset and I’m sure you have your reasons, but why did you just fuck up the party for everybody?”
“It was like a car dealership giving away 15 free cars a day. It was absurd.”
– Seth Goldstein
It also felt personal. “It was incredibly vindictive what had been done to us, and what seemed to be done to me.”
Art disagrees, according to some of the video of his conversations. The way Seth structured Bright Moments any member could have minted a Crypto Venetian – or 10 or 309 – at any time. Seth relied on a social contract here, on trust, to ensure that everyone would abide by the one-Crypto-Venetian-per-person rule. In Art’s mind, though, the access to the NFTs by a member such as himself gave him the right to mint as many as he wanted.
Many in the distributed world hold the belief that “code is law.”
He also blamed Seth for the way he set up Bright Moments. Speaking to Seth in the video, Art wants Seth to take the blame for the missing Crypto Venetians. “Say ‘this is my fault,’” he tells Seth according to the video. “Say that on twitter. Say ‘this is my lapse of judgement.’”
In any event, the smart contract that could be accessed to mint the remaining 309 NFTs has no concept of the social contract implicit within the Bright Moments structure. It’s just code. But this fascinating question of the responsibilities that code should bear has always been front of mind in the crypto world. If someone accesses a smart contract bug – if they exploit it for their own gain – is that illegal? Is it moral? Is it even a question? Many in the distributed world hold the belief that “code is law.”
Perhaps the biggest example of this debate was when one of the first and most-famous Ethereum projects – known as the DAO – was hacked in 2016 for a loss of $55 million. Three programming lines in a smart contract that held $250 million were out of order, letting a thief in a backdoor to steal millions. More recently the Mekaverse NFT project apparently used sloppy code and had its auction overrun by automated accounts, like a swarm of tiny robots, that ate up the supply that was supposed to be distributed to a wide audience. But if a project can’t capably execute their NFT drop why shouldn’t the bots claim their unfair share? That conundrum for me has been one of the most interesting to follow since I began covering crypto in 2015, a debate that will most likely be settled by the courts.
It’s a question Seth also grappled with, and that led him to change the way he’s going about the distribution of the Crypto New Yorkers NFT series.
But back in Venice, back in August, Seth thought maybe he could get the Crypto Venetians returned somehow to repair this loss. Meeting with Art would be the first step.
Venice Beach, where even the palm trees sport graffiti, near where Seth and Art met in August
Make no mistake. Everyone involved with Bright Moments knew exactly the situation Seth walked into that day. A crew of about a dozen people had been filming and documenting the Crypto Venetian saga from almost the moment it began. Now a few of them stood close enough to take video of the encounter while trying to be far enough away not to be seen. Seth had other backup as well. His son, Charlie, and Louie Ryan, the owner of the venerable Venice bar Townhouse that’s next door to Bright Moments, weren’t about to let him meet Art alone.
No, instead, they hid in the bushes nearby.
Art soon spotted them and yelled that they had to get out of there or the meeting was off. Seth came to the meeting with a bag from Butcher’s Daughter, the restaurant where they’d been waiting to get breakfast. Art made Seth put his cell phone in the bag and set it on a bench nearby. Dressed in a large brim straw hat and sunglasses, Art stood astride his bicycle for the entirety of their 30-minute meeting. The usual mélange of Midwestern tourists, surfer and skater dudes, beach bums and the ever-present homeless of Venice strolled by as this crypto stand off took place between Seth in flip flops and Art in black socks and sneakers.
Let’s pause for a minute and savor the level of absurdity that crypto has brought into the world. If nothing else, these hilarious tableaus – which are completely common in the crypto world – have brought a level of can-you-fucking-believe-it to the wider culture that should be treasured.
The absurdity was not lost on Seth. “It was weird. I felt energized because it was very dramatic, but I’m there with my Butcher’s Daughter bag, you know?” Seth said. “I’m wearing my surfer shorts and just like trying to be my chill Venice self.” Seth said it felt like he was in The Conversation, the film by Francis Ford Coppola where a scheming couple meet in a crowded noisy park to hatch their plans.
But like the ending to The Conversation there was a dark note about this meeting. Or at least Seth felt that way. Millions of dollars were at stake, as well as the future of his gallery. He was threatening to get the cops involved if the Crypto Venetians weren’t returned, and while the balmy Southern California setting may have implied otherwise, this was a dramatic and consequential meeting for both men.
“I was scared a little bit, but I knew it was the right thing to do,” Seth said, likening it to “a cartoon caper.” But Art had appeared to Seth and others as agitated and desperate in recent days and Seth had a niggling worry in the back of his mind.
“It was kind of comic,” he said, “but I didn’t know if he had a gun.”
Read Part 2, where the mechanics of the heist are revealed, Bright Moments DAO is explained and Fred Wilson introduces Seth to NFTs.
Special thanks to Rob Dieterich and his deft and diligent editing help