NFT Marketplaces such as OpenSea are often under pressure to crack down on stolen or counterfeit NFTs, but there are many NFTs that have been reported stolen but willingly sold. While the total number of stolen NFTs is unknown, there are NFTs worth millions of dollars that have been reported stolen, thus freezing from OpenSea’s platform, even though some of them were not actually stolen. This is primarily a problem for high value NFTs from known collections, but it can happen to any NFT on the blockchain, and OpenSea has not yet adapted to distinguish between real theft and a ruthless trader abusing the system .
OpenSea is a Web3 marketplace built on Ethereum where users can list, bid on and purchase blockchain non-fungible tokens (NFT) from each other. OpenSea itself is a company headquartered in the United States, and has gained a controversial reputation in the Web3 area for exercising centralized control over the platform. Unlike its jointly owned, decentralized competitors Rarible and LooksRare, OpenSea is fully owned and operated by a centralized team, and thus suffers from the same problems that other centralized platforms have in dealing with malicious users. In an industry that fights decentralization and community ownership, OpenSea has always been a hot topic.
Decrypt recently detailed the estimated value of big name NFTs that had been stolen in early July, amounting to over $ 25.4M spread over 823 stolen NFTs. However, many of the tokens from these NFT collections (often worth millions) have not actually been stolen, but were still reported as stolen by malicious users. Also, an NFT that was stolen at any time in the story is banned from OpenSea until the user who submitted the claim reports that it was returned, which permanently destroys the value. The reason this happens is because of the way NFTs and cryptocurrencies are stolen, which OpenSea can not do anything about.
NFTs are signed away, not stolen
There are many ways to steal blockchain assets, depending on the information known about the victim and their naivety around crypto, but all methods require the victim to sign their property. The easiest way to “steal” an NFT is to place a bid on the NFT in a different cryptocurrency (such as stablecoins) than the one listed. For example, if you are bidding 3.5 USDC (worth $ 3.50) for an NFT listed for 3.5 ETH (worth over $ 4000 at publication), and if the seller does not comply, they will accept the bid and sell the NFT with a strong discount. If the victim’s email address is known, they will receive an email from “OpenSea” claiming that a problem has occurred with their account, and three clicks later have logged off the NFTs. There are several other ways to steal NFTs, such as Discord scams or fake airdrops, but all rely on tricking the victim into signing their property.
Users rightly ask whether OpenSea is safe, and can avoid the marketplace completely, but it has also brought many new users into NFTs. Being a centralized company, OpenSea must protect its users as a business entity is expected to: through direct intervention. Although this approach to dealing with problems often creates new problems that need to be addressed, they have no other choice, since many users simply do not know much about crypto. The result is that a malicious NFT trader can sell their NFT to a buyer, report the one stolen to OpenSea, then later buy it back cheaper elsewhere, and report it as returned so they can sell it on OpenSea again. Twitter user / NFT trader @franklinisbored pointed out this scheme July 2.
When buying an NFT, it is therefore necessary to examine the history for details on whether the NFT was stolen, especially to check the OpenSea page to see if it has the red “Reported for suspicious activitybanner before you buy it. The only way to prevent theft is healthy skepticism and security practices on the chain, as the blockchain ensures that nothing, including NFTscan be stolen that was not given away by the owner.
Sources: Decryptor, @franklinisbored / Twitter
About the author
