The story has been that NFTs have been dead since 2021, but one collection is doing great: Pudgy Penguins, Brady writes.

Why it matters: NFT believers have been standing pat on their collections, even as volumes have plummeted, but it gives hope to all the projects still standing if one collection can thrive in the downturn.

State of play: Pudgy Penguins was the No. 4 collection on NFT Price Floor yesterday, which made it the No. 1 collection that's not owned by Yuga Labs. (It's in a close battle with Chromie Squiggles, which took the 4️⃣ spot this morning, though that project has very little volume.)

• More tellingly, it's the only project in the top 10 with anything like an upward trend over the last six months.
• It's gotten penguin toys onto Walmart's website, hoping to keep that momentum going.

But its biggest play is targeting an area where Yuga Labs has been spinning its wheels.

• The project this week promised its own little web3 environment, for holders of its NFTs and other products, called Pudgy World.
• Recall that Yuga Labs raised over $300 million selling parcels of land in its own virtual world, Otherside, but it has had a very hard time realizing that promise.

What we're watching: Team Penguin is saying an early version should come out in 2024. If the reaction to that is positive, it will put The Huddle (as Penguin holders are known) in a leadership position in the NFT world.

Flashback: Created by a handful of young entrepreneurs, the Penguins got a boost in 2021 when the New York Times featured it in a story about the rise of NFTs on social media.

• But its creators couldn't keep up with the demands of running a blue chip NFT project, and owners of the collection started rebelling.
• The rights to run the overall collection shifted hands in April 2022, and since then it seems to have been a complete turnaround.
• 1kx and other investors backed the project with $9 million earlier this year to keep building a blockchain IP brand.

What they're saying: "The purpose of the Pudgy Penguin is to make people feel good. It exists to be a friend in a world where friends are diminishing," its young CEO, Luca Netz, told Fortune last month.

Pudgy Penguins recently broke the double digits in ETH for the first time, Brady writes.

• Meanwhile, Bored Apes have been trending down, losing about two-thirds of the floor value since the start of the year.

Be smart: "Floor price" refers to the value of the most common NFTs in any given collection. Some, with rarer attributes or a special provenance, will sell for much more than the floor price.

By the numbers: ETH is the coin of the realm on Ethereum, and the convention in NFT land has been to track prices in ETH. But if you want to translate these figures into dollars: ETH has been trading above $2,000 each lately.

• So, yes, these JPEGs are selling for roughly $60,000 and $20,000 respectively — at least.

Of note: The Penguins' worst day this year was July 3, when its floor price hit 3.25 ETH, but anyone who picked one up that day has made a nearly 3X return.

• The Penguins were trading at less than 1 ETH shortly before Netz bought them.

The Penguins have made it simple for fans to wage a soft war of adorable diplomacy, Brady writes.

• Its website has an extensive media collection devoted to readymade memes and GIFs that sport the Pudgy IP.

The bottom line: Pudgy Penguins in December, in one GIF.

💼 FTX customers object to the IRS's $24 billion tax bill. (Blockworks)

👵 Where pension funds stand on blockchain investing. (Blockworks)

📖 Heard of Effective Altruism? Check out Effective Accelerationism (aka e/acc). (New York Times)

🪀 Breaking down the battle to dominate the NFT market: OpenSea vs. Blur. (Bankless)

KuCoin has been serving customers in New York state, but it got busted, Brady writes.

Driving the news: New York Attorney General Letitia James announced the settlement today, detailing $16.7 million in refunds to residents of New York state who used the site and $5.3 million in fines.

• To verify that it was useable, her staff opened an account on the exchange from their office in New York.

What they're saying: "Crypto companies should understand that they must play by the same rules as other financial institutions, and my office will hold them accountable when they don't," James said in a statement.

Details: Customers have 90 days to claim refunds in cryptocurrency form, and after that, they can email [email protected]. The site will no longer be usable for residents of the state.

• KuCoin also has to take steps to keep New Yorkers off the exchange.

By the numbers: CoinMarketCap ranked KuCoin as the fourth largest exchange in the world by volume before the news dropped, with an estimated $1.23 billion in volume over the previous 24 hours.

• It has since fallen to the sixth place, possibly reflecting the bad news as folks moved money around.

Flashback: The state of New York has been on something of a legal campaign lately. In October, James announced a civil lawsuit against some of the industry's larger players.

• Meanwhile, the state's Department of Financial Services has new stricter rules for listing and delisting assets on exchanges that it has authorized to operate.

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