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OpenSea faces lawsuit over ‘destroyed’ stolen NFT feature
The world’s largest NFT marketplace, OpenSea, is facing a lawsuit over its stolen NFT policy. Jesse Halfon is leading the case against the company. In particular, he is a lawyer/strategic advisor for NFTs, DAOs, and works with IP law for creators and platforms. In response to the announcement, others have asked to join the lawsuit against OpenSea. While there isn’t a class action right now, the support from the wider community suggests it could become a possibility.
The lawsuit against OpenSea for their stolen NFT policy
The lawsuit by Jesse Halfon against OpenSea focuses on their NFT policy regarding how it handles “stolen” NFTs. It is not the first time that the policy has been put under the microscope.
The policy has been the subject of frustration and concern from a large number of the NFT community. With this official lawsuit ongoing, it will also be interesting to see if there is any change from OpenSea.
In a tweet, @JesseHalfon announced the lawsuit, with the accompanying document, filed in the state of Michigan. He said: “Leave a lawsuit against @open sea today based on their “broken” stolen NFT policy. I think this template could be the driving force that forces a prolonged change to the system.”
How does the lawsuit against OpenSea work?
Like many others in the NFT community, Jesse is fed up and wants a change in policy from OpenSea. To do this, he has filed a lawsuit through the small claims court to take action. Furthermore, Jesse hopes that this will be a wake-up call to the hugely popular NFT platform.
Due to the OpenSea terms and conditions, the lawsuit against their stolen NFT policy is for arbitration. Most online user agreements state that people must resolve claims this way.
Members of the NFT community hope to join the OpenSea lawsuit
Although many people have asked to join the lawsuit, taking a class action lawsuit is also difficult. Importantly, the OpenSea Terms also prohibit class actions. The terms state: “All claims and disputes within the scope of the arbitration agreement must be resolved on an individual basis and not on a representative or collective class basis.”
However, Jesse stated in later tweets that while this makes the possibility of a class action lawsuit unlikely, it is not impossible. He also hinted that he has some ideas about how to get around the terms of service for a class action lawsuit against OpenSea.
What are the guidelines for OpenSea stolen NFT?
The official OpenSea policy prohibits the sale of stolen NFTs and does not allow these items on the platform. They say: “We take allegations of theft seriously and when we are notified of potentially stolen items, we disable the ability to buy, sell or transfer the items via OpenSea to ensure we comply with legal requirements that protect users.”
Of course, protecting people’s assets is important, and at the heart of that is what OpenSea is trying to do. But many in the NFT community are concerned about how the policy works.
Problems with the NFT policy
Some people have found their NFTs locked and are now unable to sell them. This is usually because previous owners of these NFTs have contacted the marketplace and identified them as stolen.
Unfortunately for those who now own NFTs and had no part in the theft, they are currently unable to sell NFTs. Moreover, the total value of these NFTs stuck in limbo is in the tens of millions of dollars.
The OpenSea lawsuit aims to address these matters and make all parties happy. Hopefully, now that the conversation is happening across social media, OpenSea will look at how they can move forward with the policy.
