Two Opensea Lawsuits Undermining the Security of NFT Marketplaces
Opensea is one of the largest NFT marketplaces in the industry. In 2021, it amassed over 2895% in revenue, when its valuation rose from $95 million in February to $2.75 billion in September that year. Despite its good tidings, Opensea has faced setbacks in its security measures that have led to the loss of funds from users.
Following Timothy McKimmy's lawsuit, legal organizations are waking up to the calls of DeFi investigations. OpenSea’s situation has made users question the security protocols of many NFT marketplaces, calling for more caution in the face of a growing number of NFT scam projects.
Timothy McKimmy's Opensea Lawsuit Over the Loss of an NFT
Timothy McKimmy lost his Bored Ape Yacht Club (BAYC #3475) NFT to anonymous hackers on February 7, 2022. The hackers gained access to his NFT through a bug in OpenSea's code, allowing them to sell and resell the NFT at prices lower than its market worth.
After gaining access to OpenSea's code, the hackers allegedly did the initial transaction between themselves, placing and receiving an offer of 0.01ETH ($26 at the time) on behalf of McKimmy.
Afterward, they resold the NFT at 99ETH ($257k at the time), a price McKimmy still believed was lower than the token's worth, which he believes is valued at $1.3 million considering its rarity score and ranking. According to McKimmy, OpenSea neglected his complaint and did less to tackle the situation, prompting him to file the case.
The BAYC NFT comes with many benefits, including access to its holders' community, where you could converse with fellow holders. Popular holders of the token include NBA’s Shaquille O'Neal, Madonna, Neymar, Eminem, Lil Baby, Mark Cuban, and Justin Bieber, among many others.
A released statement from the plaintiff showed he filed the Opensea lawsuit on behalf of himself and the entire NFT community. He wishes that the outcome leads to safer NFT marketplaces for crypto art investors. If he could face such a fate, celebrities who invested may suffer the same.
OpenSea had released a statement in a tweet, saying that 80% of minted NFT/collectibles on its platform were fake or plagiarized, but has done nothing to curtail them, McKimmy’s attorneys said in the earlier released statement.
Robert Armijo's: A Case of Bad Customer Service
Another notable Opensea lawsuit is Robert Armijo’s case over the platform’s slow customer service that led to the alleged loss of $300K worth of NFTs to scammers. Although OpenSea did not have a direct hand in the scam, as he struck the deal outside the platform; however, the deal was finalized on OpenSea.
How did the scammer pull the rug, and what’s the case for OpenSea? Armijo contacted the user on Cool Cats Discord server, who sent him a fraudulent link he clicked. Afterward, the scammer gained access to three of his collectibles—a Bored Ape and two Mutant Apes.
After he realized the situation, he claimed to immediately contact OpenSea customer support through several means to freeze his assets. However, the customer support handled his complaint slowly, giving the scammers enough time to cart away his assets.
NFT projects and marketplaces are the subjects of various attacks, with the most recent being the Bored Ape Yacht Club (BAYC) $13.7 million, Axie Infinity’s $600 million, and TreasureDAO $1.4 million hacks.
These breaches undermine the security of these platforms and show that NFT holders have to do more in personalizing the security of their tokens. It also gives a hint that blockchain technology is still miles away from the top-notch security we anticipate.
But what becomes of the current victims? Will they recuperate their losses? And will Opensea eventually own up for their alleged negligence? Only time will tell.
