Disaster or deception? An examination of the downfall of a ‘philanthropic’ NFT initiative

Established in November 2021, the non-fungible token (NFT) marketplace Orica positioned itself as an “ethical platform” that benefited artists, collectors, and charitable organizations. At its inception, the organization was engaged in notable initiatives — from constructing a school in Uganda to supporting victims of human trafficking and assisting Ukraine.

However, less than two years later, the founders of the project have vanished, and the marketplace’s user interface is no longer accessible. What remains are the project’s charitable contributions, which have been confirmed as authentic, alongside claims from dissatisfied users alleging that the developers executed a rug pull. In a recent development, co-founder Danial Zey breaks his year-long silence, denying all accusations and asserting that the project was “hacked,” while also claiming that it is still active. Cointelegraph investigates.

An ICO during the bear market

As per the initial coin offering (ICO) information platform CryptoTotem, Orica conducted a fundraising campaign from August 14 to September 14, 2021. The goal was to raise $3.1 million through the sale of its Orica (ORI) token. During its ICO, Orica pledged to allocate 50% of the total ORI supply for “NFT marketplace rewards.” An additional 10% was designated for “advisors and partners,” 15% was allocated to the team, and 25% was offered to investors. Upon launch on August 21, 2021, the price of ORI peaked at $3.638 per coin, subsequently dropping to $0.036 by October 1, 2022, according to data from Live Coin Watch.

The token currently holds no significant value, and its communication channels seem to have gone silent. A former user, who preferred to remain anonymous, informed Cointelegraph that the “[NFT] marketplace kind of dried out with not enough people using it and then very quickly everything went kind of offline including their website.”

ORI price chart. Source: Live Coin Watch

The philanthropy that endured

In late 2021, the company collaborated with the Austrian charity Bbanga to assist in building a school for children in the Ssese Islands of Uganda. Bbanga commissioned German digital artist Mellowmann to create Uganda-inspired digital art pieces as NFTs, which were then sold through Orica’s marketplace. The sales exceeded the $6,500 target required for the school’s construction.

Mellowmann and Bbanga NFT sold at the Orica auction. Source: Orica

A former Orica employee, who wished to remain anonymous, stated to Cointelegraph that “the Uganda school received full payment as this was overseen by Sani, Founder of the Bbanga Project, who was working with Orica at the time.” A video released in June showcased that some of the school’s structures had already been completed, including a main hall and library.

The Orica and Bbanga school in Uganda. Source: Bbanga

On December 21, 2021, the charity organization Hope for the Future also announced its plans to sell NFTs on Orica to support its initiatives. Hope for the Future is another Austrian-based nonprofit that assists victims of human trafficking in reintegrating into society after their rescue. The charity remains operational today. Its efforts to support Ukrainian artists were also realized through the REFUGE campaign that took place in March 2022.

An embroidery NFT “Obra” previously held for sale on Orica. Source: Aline Brant

When asked about the situation, the former Orica employee remarked, “All artists were paid in full.” Approximately $30,000 was raised in conjunction with Orica’s efforts to assist Ukraine, processed through the cryptocurrency donation platform The Giving Block. In one of the last communications before going silent, Zey stated: “We donated 10% of the amount we ever made. Our main product is tech that is built to give to people.”

And the project that didn’t …

Despite official explanations regarding the project’s shutdown, blockchain data and user complaints indicate discrepancies.

On May 11, 2022, the Polygon version of Orica was launched as part of its transition from BNB Smart Chain. This version had a total supply of only 84 million tokens, which is 16 million fewer than the original Orica token on BNB Chain. The Polygon version of ORI was designed as a “liquidity generator” token with integrated liquidity provider and swap functionalities. It had the capability to call contracts on the decentralized exchange QuickSwap, a fork of Uniswap v2 on Polygon.

On June 4, 2022, an Orica Discord server administrator known as “Plem” informed users that the migration was complete. According to Plem, users had received tokens on the new chain equivalent to those they held on the previous chain.

Orica announcing the Polygon migration. Source: Discord

Some users expressed dissatisfaction, claiming they had not received their tokens. In response, the admin instructed them to add the new token contract in MetaMask. If they did this and still did not see their tokens, they were advised to submit a support ticket.

However, the deployer on Polygon did not directly distribute tokens to users who held ORI on BNB. Instead, it transferred ownership to a different account, which subsequently sold nearly the entire supply of the coin through market-making activities. Zey asserted that this second account was not managed by him. He claimed that a “hacker” had stolen his deployer key and transferred it. The new owner proceeded to execute various liquidity provider and swap functions over the following two months on QuickSwap.

Zey did not report this incident until August 11, 2022, exactly one month after it occurred. A team member had reported 24 days after the “attack” that the migration had been finalized. On the same day, the new owner transferred an unusually large quantity of tokens — 23,187,983 — to address 0x14dd44e1d3f9a173998c53d75622127ce921ccee. Following this transaction, the new owner continued to execute liquidity provider transactions for ORI tokens until ceasing on September 11, 2022. In a similar Telegram message on August 11, 2022, Zey claimed that his laptop had been hacked and that tokens had been “moved out directly from the deployer.”

On August 12, 2022, Plem announced that the project would be “closing communications” due to a “hard situation that involves massive uncontrollable tokens deployment and selling process.”

Orica staff stating that they would cease communications. Source: Discord

In the final communication, users were instructed to send direct messages to Zey if they had inquiries, referring to the team’s blockchain operations lead. Subsequent messages in the group indicate that Zey has blocked all communications.

Orica’s last message before going dark on Discord. Source: DiscordCo-founder Danial Zey’s response to a user inquiry before new messages in the channel were archived. Source: Telegram

Related: Newly discovered Bitcoin wallet loophole let hackers steal $900K — SlowMist

On September 11, 2022, the new owner executed a final transfer of approximately 150 Polygon (MATIC), valued at $133.10 at that time, to address 0xfE3fB1d3C9FBF50b6af3A60b5D070dF68D87b99e. This account had previously received 3,463 MATIC ($3,082 at the time) from the new owner. At the time of publication, 9.9 million ORI ($4,341 at today’s price) remains in the account that was transferred ownership after deployment.

Co-founder’s new disclosures

In an interview with Cointelegraph on August 17, 2023, Zey refuted the rug pull allegations, stating:

“I think the situation is complex and it is not wise to give out info that we might need to win some of the funds back. About the part with rug pull. We had a team of more than 15 people and we paid them until the end salaries plus we paid for the liquidity, Certik audit and some parts of the development.”

“Our tokens were locked,” Zey stated. “On the blockchain, it is also provable that we had several severe attacks on us. We are a charity project but still got hacked,” he claimed while alleging that the hacked funds were laundered through the cryptocurrency mixer Tornado Cash, making it impossible to trace. “The few remaining people that worked without any salary like myself are still in this project working patiently behind the scenes but the comeback has to be strong so we can make up for the situation,” Zey asserts.

Zey did not respond to a request for the hash ID of transactions related to the alleged Orica hack.

Out of the 12 team members listed in the project’s ICO, five have removed their LinkedIn profiles — Zey, legal counsel Ivan, process manager Karim, IT project manager Pouriya, and business development manager Rilwan. The others, aside from Zey, were either unreachable or had departed from Orica by the time of its collapse.

The Orica founding team became unreachable after last year. Source: CryptoTotem

A mixed legacy

As of now, the majority of what remains of Orica is embodied in the physical structures of a school in Uganda and the artists it has supported.

However, lingering are the token holders who have yet to receive a satisfactory explanation regarding the project’s cessation. Despite breaking his silence, Zey has not addressed the reasons for the hiatus, leaving many questions unresolved.

It is not unusual for investors and co-founders to develop relationships around a project as allies and part ways as adversaries during its downfall. Yet for Orica, there was at least a fleeting moment when everything appeared to function effectively.

Cointelegraph editor Zhiyuan Sun contributed to this story.

Related: Crypto developer commits $2M rug pull fraud to fuel gambling addiction