OpenSea changes stolen NFT policy after user call

With NFT fraud is on the rise, Web3 platforms are increasingly forced to grapple with identifying and managing stolen assets. As the biggest NFT marketplace, Open sea has borne the brunt of this Web3 responsibility, but that guidelines for blocking flagged assets has received significant backlash, particularly for penalizing users who didn’t know they were buying stolen NFTs.

In response, OpenSea announced on Twitter on Wednesday that it will change the way it handles NFT assets reported stolen.

OpenSea would previously block stolen assets from being bought, sold or transferred on its platform as it investigated each case, which meant an indefinite stay on access to such NFTs and their respective value.

Tweeting that it wanted to “address the elephant in the room”, OpenSea wrote that it will now require a police report to be submitted within seven days of an NFT being flagged as stolen. The marketplace notes that it has done this in the past for “escalated disputes,” but that it will now be required for all NFTs reported stolen.

The move is designed to prevent false reports. If a police report is not submitted in time, the embargo on the items will be lifted.

Furthermore, OpenSea says it will simplify the process for withdrawing a claim when a user recovers their stolen NFT, or if they otherwise wish to withdraw a report.

On Thursday, OpenSea clarified that the police report requirement will only apply to newly submitted claims for stolen NFTs, and not existing cases. “If we applied this retroactively, we’d be asking months or weeks later for them to take an extra step, when they’d (hopefully) put this behind them,” the marketplace tweeted.

An NFT is a blockchain token that represents ownership in an item, and they are often used for digital goods. Popular NFT use cases include artwork, profile pictures, digital collectibles, and video game items. OpenSea is the leading NFT marketplace, which processes routinely trading volume for billions of dollars each month before recent crash in the crypto market.

As the NFT market has flourished and matured, there has been an increase in scams designed to trick users into signing what they think is a legitimate transaction with their crypto wallet – for example for a new NFT or token drop – but instead gives attackers access to all the assets in the signing wallet, allowing them to transfer and steal NFTs and other tokens.

Such scams have become common on social media, especially Twitter, with accounts from reputable creators and projects – included Beep and Noun– hacked and used to spread links that can lead to asset theft. This has led to a debate whether the creators should refund the users who get their NFTs stolen in such cases.

OpenSea said that because it is based in the US, it cannot knowingly allow the sale of NFTs that are marked as stolen. However, the marketplace’s broad policy of blacklisting reported assets means that users who have purchased NFTs – unaware that they have previously been stolen – are sometimes unable to trade or transfer the asset as a result.

“In some cases, the buyer who unknowingly bought a stolen item (through no fault of their own) was inadvertently punished. This is one of the most difficult problems we face,” OpenSea acknowledged on Twitter. “Please believe that we take it seriously [and] we’ve been actively listening to your feedback on how to deal with it.”

Please note that while OpenSea may block the ability to buy, sell or transfer selected NFTs on its own marketplace, it does not prevent users from trading elsewhere. Owned NFTs remain in users’ own wallets, and they may use marketplaces that do not have the same policies or that have not similarly flagged these assets as stolen.

OpenSea also noted that it is working with other Web3 platforms to try to minimize the impact of such NFT scams, and better educate users. It pointed to popular Ethereum wallet MetaMask’s latest updatewhich makes users more aware that they are signing away broad access rights with certain transactions – broad access that is often sought to carry out such attacks.