Industry Trends

Worthless (or Worth Less) NFTs

Caleb Newquist Editor-at-Large, Gusto 
trust solutions

May 5, 2022

Want more On the Margins? Check out the archive.

NFTs

Gusto has a new guide out: NFT: Not Free of Taxation. And if you haven’t had the pleasure of making sense of non-fungible tokens for clients, let me just say: You’re missing out on some fun. Don’t worry, it’s not the kind of fun you want to have. It’s not “good trouble.” It’s legit trouble, as this recent Wall Street Journal article reports:

The sale of nonfungible tokens, or NFTs, fell to a daily average of about 19,000 this week, a 92% decline from a peak of about 225,000 in September, according to the data website NonFungible.  

The number of active wallets in the NFT market fell 88% to about 14,000 last week from a high of 119,000 in November. NFTs are bitcoin-like digital tokens that act like a certificate of ownership that live on a blockchain.

Rising interest rates have crushed risky bets across the financial markets—and NFTs are among the most speculative.

Okay, so is the NFT bubble popping? Before you say, “Yes, absolutely, because I have had severe NFT FOMO, and schadenfreude is so delicious,” Bitcoin’s price history should be enough to make you second guess that impulse. 

Anyway, things are bad enough that some of you who have clients dabbling in NFTs could be looking at some losses—in some cases, big ones:

An NFT of the first tweet from Twitter Inc. co-founder Jack Dorsey sold in March 2021 for $2.9 million to Sina Estavi, the chief executive of Malaysia-based blockchain company Bridge Oracle. 

Earlier this year, Mr. Estavi put the NFT up for auction. He didn’t receive any bids above $14,000, which he didn’t accept.

[…]

Another NFT buyer purchased a Snoop Dog curated NFT, titled “Doggy #4292,” in early April for about $32,000 worth of the cryptocurrency ether. The NFT, an image of a green-skinned astronaut standing on what looks like a Hollywood Walk of Fame star, is now up for auction, with an asking price of $25.5 million. The highest current bid is for 0.0743 ether—about $210.

Look, I suppose if you have a client who spent millions of dollars on an NFT, then maybe they aren’t too concerned about losing millions of dollars on said NFT or don’t care about the capital loss carryover, for that matter. Still, maybe snag Gusto’s new guide just in case. Can’t hurt.

Elsewhere in NFTs: Greg Kyte and I discussed them on a recent episode of Oh My Fraud.

Auditing

Here’s something you don’t see every day:

Shares of German real estate group Adler dived as much as 46% on Monday after the company said its auditor, KPMG, won’t sign off on its accounts.

KPMG withheld its opinion because Adler denied it “access to certain related party information,” which is usually a bad sign, and half of Adler’s board resigned over the weekend, which is a really bad sign. Still, the board chair gave things a good spin, saying that the company had not violated its bond covenants because:

“There was an audit, and we have audited results.”

Just not an opinion on those results, which is supposed to be the point? Even if you think audit opinions are commoditized and have no value, this suggests that they’re worth something. I can’t imagine firms sending legions of young auditors into the field to do auditing stuff, fill out the checklists, and then just call them all home and punt on the opinion. There has to be something to show for all the eaten hours and bad takeout, right? Right? 

RTO: Impression management

The pandemic was arguably a great situation for workers who weren’t as comfortable with the obligatory schmoozing that came with office life. If you hate small talk, nodding awkwardly as you pass strangers in the hall, or just people in general, then man, the last couple of years have been an absolute joy for you. You did your work, were recognized for it (or not), rewarded for it (or not), and that’s it. Your work spoke for itself.

Now with the return-ish to the office, this also means the return of office dynamics, which is a nice way of saying office politics. And the folks who thrive in those circumstances are probably relieved. Who are these folks? A quote in a recent Washington Post article explains it nicely:

“There is a specific type of personality that has always over-performed if we look at their career success relative to their actual contribution,” says Tomas Chamorro-Premuzic, a professor of business psychology at Columbia University. It encompasses extroversion, confidence, assertiveness and what he calls “impression management” — the ability to say the right things at the right time. Which could be used for good or evil: “When you call it emotional intelligence, that has a good meaning,” he says. “When you call it sucking up or manipulating, it has a bad meaning, but it’s the same thing.”

Despite the frustrations with hybrid work, non-schmoozers will appreciate not having to engage in “impression management.” Still, if you’re in this group, don’t kid yourself about the downsides:

There are employees who believe their achievements should speak for themselves. “Good luck with that,” says Chamorro-Premuzic, “because in most cultures, you’ll be passed over for promotion.” Or people don’t speak up in a meeting unless they have something useful to say. Very honorable, but that makes it easy for suck-ups to grab the spotlight. 

During my accounting career, I completely believed that my work would speak for itself, and, wow, did I ever learn this lesson the hard way. For starters, my work wasn’t so good that it dazzled everyone I met. Couple that with my refusal to… let’s call it, “advocate for myself,” and that probably explains my lack of progress. And even if my work had been undeniably brilliant, I still have my doubts about how things would’ve gone.

The point is, even if you think your workplace is a legitimate meritocracy: 1) it isn’t, and 2) you’ll be doing yourself a favor by putting in a little effort around impression management. I’m not saying you have to be Dwight Schrute to your boss’s Michael Scott. I am saying that putting a little effort into impression management can go a long way. Especially since people who put a lot of effort into impression management will be putting a lot of effort into impression management.

Fresh from Gusto (and friends)

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Webucation

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Elsewhere

  • Our next live People Advisory certification is on May 17 featuring Nayo Carter-Gray. Good for 6.0 CPE credits.
  • The next edition of the Quarterly Scoop with my Gusto colleague Annie Arthur and special guest Keila Hill-Trawick is May 19. Good for 1.0 CPE credit.

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Caleb Newquist
Caleb Newquist Caleb is Editor-at-Large at Gusto. In 2009, he became the founding editor of Going Concern, the one-of-a-kind voice on the accounting profession, serving in the role for 9 years. Prior to Going Concern, Caleb worked as a CPA for nearly 6 years in New York and Denver. He lives in Denver with his wife, two daughters, and two cats.

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