OpenSea has security and fraud issues and if an account holder nft market True, it is guilty of negligence and extortion in the protection of its customers.
As a leading NFT creator, collector and venture capitalist Kevin Rose There is no doubt that piracy is a serious problem in the NFT space. He lost $1.1 million, a portion of his personal collection, in a recent phishing attack, although it had nothing to do with OpenSea.
Robert Akers, as we detail below, also fell victim to an NFT phishing attack. Not a high-profile user of OpenSea as Rose, two of Akers’ NFTs were stolen in a phishing attack.
He alleged that far from immediately trying to help retrieve their property and prevent resale by thieves, as open sea The major NFT marketplace reportedly did this to Rose and locked Akers out of his account for three months.
During that time, Akers alleges that he suffered large losses on the 58 NFTs in his account because he was unable to trade them.
Two now blacklisted stolen NFTs can be seen listed on OpenSea, with a warning that the items cannot be bought or sold due to suspicious activity:
https://opensea.io/assets/ethereum/0xd2f668a8461d6761115daf8aeb3cdf5f40c532c6/2299
https://opensea.io/assets/ethereum/0x4db1f25d3d98600140dfc18deb7515be5bd293af/5297
The thief sold the stolen Acres NFTs for 0.5 and 0.7 WETH.
However, Akers estimates the losses due to not being able to trade his remaining NFTs on OpenSea to be up to $500,000 and is suing the NFT marketplace — OpenSea is a trading name of Ozone Network Inc. — for those To make up for the losses.
They have hired Traverse Legal as Managing Partner and trial attorney specializing in blockchain and Web3, with Enrico Schaefer leading the team.
Image caption One of the stolen NFTs: https://opensea.io/assets/ethereum/0xd2f668a8461d6761115daf8aeb3cdf5f40c532c6/2299
OpenSea user says his account was closed after complaining
Akers alleges that when he complained about OpenSea’s slow response to the theft, it was then that the market locked him out of his account.
According to a timestamped support communication with OpenSea seen by CryptoNews dated July 12, 2021, the day the theft occurred, Akers notified OpenSea of the theft prior to the sale of the stolen NFTs on the market.
The stolen transaction hash is shown on Etherscan and timestamped at 01:38PM UTC: https://etherscan.io/tx/0xa6bc538181d79b342cd69042eac74b9a64a1aeb99ed05d98d3f5c09a6f7bf59d
The sale took place an hour later at 02:38 UTC: https://etherscan.io/tx/0xd2327c65e66d0ac94282580f0a8d64d1cd155faa53d7613565d55c6ed9862b25
The email reporting the theft to OpenSea Support is timestamped at 02:11 PM UTC.
Tx hashes show that there was half an hour between OpenSea being alerted about the theft and the subsequent sale in the market.
Of course it could be argued that the half-hour window didn’t give OpenSea much time to react, but if this was legacy finance, where automated monitoring systems are in operation, there would be procedures in place to immediately suspend suspicious activity. .
But, given its lack of action to prevent resale, it may be reasonable to conclude that OpenSea does not have sufficiently robust systems in place to be able to respond to such alerts from users in a timely fashion. Is.
OpenSea’s initial response appears to be intentionally fraudulent
Partially, in its only public statement made on the matter to date, an OpenSea spokesperson said: “The theft in question occurred outside OpenSea and the items were sold before OpenSea became aware of the reported theft. We Immediately after being notified and made aware, we disabled the item and the user’s account has since been unlocked.”
The first clause of the first sentence is correct – it was a phishing attack that had nothing to do with OpenSea. But, if Mr. Akers is right, then the rest of the statement is wrong. The OpenSea, as shown above, was reported stolen before the sale took place.
The second sentence is deceptive to say the least as it may be inferred that the user’s account was unlocked immediately after the two nft were disabled, which was not the case – Akers’ account was closed for three and a half months.
Indeed, it appears that after Akers took issue with OpenSea’s failure to stop the sale of stolen NFTs, his account was closed.
Akers wrote in an email to Cryptonews.com:
“Disappointed and believing OS took some responsibility for what happened, I noted that OS should be liable for monetary damages. In response, OS locked my account without notice, request or permission.
Akers alleged that “OS demanded that I swear that my wallet was not compromised (meaning OS would not be liable)”.
According to Akers’ account, he was locked out of his account when he refused to comply with OpenSea’s alleged demands. Aker further claims that OpenSea prevented him from trading 58 of his NFTs on the OpenSea marketplace as a result of the lockout.
OpenSea User Claims NFT Markets Can “Seize Your NFT Assets”
Acres wrote in his email to 0x0news.com: “The OS represents that its users’ NFTs are not in the custody of OpenSea. Yet, most OpenSea members are unaware that the OS can seize your NFT assets and charge you may prevent your NFTs from being transferred or traded for days, weeks, months or possibly forever, even if you have done nothing wrong.
The OpenSea Help Center page clearly states the opposite of the situation:
“While we may prevent your items from being bought or sold using OpenSea’s services, your items remain on the blockchain and are not in OpenSea’s custody.”
OpenSea certainly will not be able to prevent a user of the platform from trading their NFTs on a competitive market. This means that it cannot be that, strictly speaking, OpenSea can “confiscate your NFTs”, as Akers claims.
However, in practice, most of the available liquidity in the NFT market is found on OpenSea. here we see writ large Limitations of Crypto Decentralization contrary to its theoretically intended results in practice.
In defense of the allegations against OpenSea regarding the lock on his account, Akers told Cryptonews: “Once your wallet is ‘locked’ or ‘blocked,’ all items in your wallet are marked as suspicious. are flagged and thus are not transferred to any wallet. They will never be able to trade on OpenSea until they remove the flag against your account.
“Currently, OpenSea commands over 60% of all NFT trading volume and was much higher than when this event occurred.
“Trading volume being split by competitors means you are not able to get the most competitive price and thus again incurring financial losses for the wallet lock placed on me against my will builds.
“Most individuals who trade on any OS competitor’s marketplace often use the OS as a resale market after making a purchase on the competitor’s marketplace.
“So then, in this case, it would be the ‘suspicious’ tag shown on all my NFTs. [the] os market[;] The new buyer also cannot sell it and thus when they are doing due diligence during the buying process they will not buy them as the resale options will be limited.
How can that line of reasoning hold up in a court of law?
OpenSea accused of extortion attempt
Akers’ lead attorney, Enrico Schaefer, managing partner at Traverse Legal, posed the same question regarding the complainant being free to trade his NFTs elsewhere.
This was his response.
“OpenSea acquired Mr. Akers’ assets by assuming control of his account, which constitutes tort of conversion [lawyer-speak for a form of theft], It gives persons who are victims of theft, a legal right to take legal action to recover their loss.
“In short, conversion provides one with the ability to sue to obtain damages for the conversion on one’s own property. Conversion occurs when a person, with intent and without proper authority, takes another person’s property or money control, thereby limiting their ability to reach it.
“Control does not need to be exclusive. The lack of response from OpenSea and the attempt to unlock the account must have been a surprise and a cause for concern, as it would be for anyone in a similar situation.
Why didn’t OpenSea react in time once alerted about the NFT theft?
Furthermore, Travers Legal, on behalf of Akers, claims that OpenSeas had three hours to act before selling the stolen NFTs on its platform.
Travers Legal writes, “Had OpenSea not waited more than three hours to actively engage, the NFT could have been locked and potentially returned to its wallet.”
As we mentioned earlier, the time between being alerted about the theft and their subsequent sale was actually only half an hour, according to an analysis by Cryptonews.
Nevertheless, after all the well-documented issues faced by its users on the site, se Insider dealing To contain the piracy, OpenSea must, by now, have implemented automated and human systems and processes to stop suspicious activity immediately when it is flagged.
Timing aside, surely OpenSea would be able to defend itself on the grounds that Akers would be free to trade its 58 NFTs listed on OpenSea elsewhere?
“This case is best handled by Robbie, who has experienced the position,” Schafer wrote in an email to Cryptonews.
He continued: “However, I have previously represented clients facing similar issues. The claim that ‘one less platform with fewer buyers and sellers’ could have been used was instead a reference to OpenSea’s own platform. Not a valid excuse to shirk our responsibilities to the members.
“OpenSea is the platform of choice for individuals looking to maximize demand and pricing pressure in the market. Using a platform with significantly lower trading volumes results in liquidation sales rather than core trading activity.
Three unanswered questions for OpenSea
Beyond its initial statement shared with media outlets, what does OpenSea have to say about all this?
We sent the following questions to OpenSea:
- Why was Mr. Akers kicked out of his account against his will?
- Why did Mr. Akers, allegedly, need to prove himself to be a liar in order to unlock his account?
- Will Mr. Akers receive compensation for the damages he allegedly suffered when he was unable to access his account?
A week later and we still haven’t received a response from OpenSea.
It is surely the height of irony that a marketplace that trades products based on a technology whose value is based on its ability to securely assign unique identities to digital and non-digital assets and other assets is vulnerable to fraud. has not been able to prevent the spread of the listing and sale of said stolen property.
What does OpenSea archive trade fee revenue Above the interests of your users?
We let Akers have the last word. Over the telephone, in a conversation in which he agreed that half an hour is the correct time with regard to theft reports and the sale of stolen property, he nevertheless insisted: “The chief [of his complaint] The fact is they blocked my account for three and a half months and asked me to give perjury.
“I fully understand that this is a phishing scam and that within 45 minutes to an hour I myself am being notified and then OpenSea is being informed – and the stretch of half an hour between me notifying them In terms of saying that it’s stolen and hoping they can take some kind of action – that’s too little, I totally follow that.
“But everything that happens from that transaction is Negligence 101.”
whether your account was previously locked by OpenSea; Attacked by fraudsters but finds OpenSea slow to help; Or a manufacturer of NFTs listed on OpenSea with scammers constantly posting fraudulent versions of your products? If so, contact Cryptonews [email protected],
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