Hack Victim Files $1m Suit Against OpenSea

Bob Mason
Updated: Feb 22, 2022, 12:18 GMT+00:00

A lawsuit against OpenSea could set a precedent for the NFT marketplace that may force platforms to address vulnerabilities that leave users exposed to exploits.

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OpenSea continues to grab the news headlines through the early part of this year. The leading NFT marketplace saw record-high trading volumes in January. Since then, however, trading volumes have fallen though remain at elevated levels.

While NFT marketplace activity has been rampant since the start of the year, illicit activity has also spiked.

OpenSea Becomes Target for Cybercriminals

Just last week, OpenSea users became victims of a phishing attack. Reportedly, attackers stole 250 NFTs, which they then sold off for $1.7m in Ether (ETH).

Amongst the stolen NFTs were the famous Bored Ape Yacht Club and Decentraland (MANA). The attack came after OpenSea had announced a “smart contract” upgrade. As part of the upgrade, users had to move their listed NFTs to a new “smart contract” within a 1-week deadline. All the stolen NFTs were reportedly from users who manually migrated to new “smart contracts” on OpenSea.

The attack wasn’t the first on OpenSea in recent months. In January, OpenSea refunded 750 ETH to NFT holders who had fallen foul of NFT exploits. Other cybercrimes against OpenSea and its users included a rug pull and a $2.2m NFT theft from famous art gallery owner Todd Kramer.

OpenSea also introduced a cap on “free NFT minting” to only later reverse the decision. OpenSea had introduced the cap to curb a rise in plagiarism. According to OpenSea, plagiarized, spam, or fake NFTs accounted for 80% of freely minted NFTs.

Despite the laundry list of cybercrimes against OpenSea, there had yet to be any proceedings against the NFT marketplace.

OpenSea Cybercrime Victim Files $1m Lawsuit

This week, the NFT marketplace may have experienced a seismic change. A former owner of a Bored Ape Yacht Club NFT has reportedly filed a lawsuit against OpenSea. According to the news, the former owner was a victim of the exploit that involved inactive listings. Hackers were able to purchase the NFT for 0.01 ETH. The lawsuit claims that OpenSea was aware of the bug that left victims vulnerable to the exploit. The lawsuit reportedly goes on to state that “instead of shutting down its platform to address and rectify these security issues, Defendant continued to operate.”

With the NFT marketplace under increased regulatory scrutiny, the outcome of the case will draw plenty of interest. A ruling in favor of the claimant could set a painful precedent for NFT marketplaces. It would also force platforms to address vulnerabilities appropriately.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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