OpenSea Fraudulent NFT Listing
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In August 2021, a fraudulent listing on the OpenSea NFT marketplace attracted more than 40 buyers of fake 24px cats NFTs. There is no way for those affected to recover their assets.
This is a global/international case not involving a specific country.[1][2][3][4][5][6][7][8][9][10][11]
About OpenSea
"The world’s first and largest digital marketplace for crypto collectibles and non-fungible tokens (NFTs). Buy, sell, and discover exclusive digital items." "Discover, collect, and sell extraordinary NFTs. OpenSea is the world's first and largest NFT marketplace."
"As the first and largest marketplace for Non-Fungible Tokens and Semi-Fungible Tokens, OpenSea provides a first-in-class developer platform consisting of an API, SDK, and developer tutorials. Feel free to browse around and get acclimated with developing smart contracts and interacting with NFT data."
"Fascinated by the [CryptoKitties] movement that was forming, Devin Finzer and Alex Atallah joined early adopter communities in Discord and started talking to users. With the OpenSea beta launch in December 2017, the first open marketplace for any non-fungible token on the Ethereum blockchain was born."
"Valued at $13 billion in a recent funding round, OpenSea has become one of the most valuable companies of the NFT boom, providing a simple interface for users to list, browse, and bid on tokens without interacting directly with the blockchain."
"24px cats! 9900 algorithmically composed unique pixelcats in the original CryptoPunk 24x24 format! Each trait handcrafted! Happy hunting for the special one :)! Not affiliated with Cool Cats NFT."
"Yesterday I was talking about a cute new digital collectable collection on OpenSea that I was considering buying into, noting that there were 10k which had recently sold out and the cheapest ones were getting more expensive by the minute. Tara was sitting across from me at the breakfast table checking it out as well. We talked about how cute they were and sent a few back and forth to look at."
As Tara was getting ready to buy one she asked “wait, why are there only 800 of these, are they still minting them?” "We quickly realized that she was looking at a fraudulent collection that had been named almost identically with only one extra letter, but was coming up first in the search results."
"OpenSea has 2 different and separate kinds of verification. Account level – are you who you say you are, and Collection level – Is this a legitimate project or not? (To sell an NFT on OpenSea you have to make a Collection for it to live in)."
"Collections are verified separately and somewhat arbitrarily. Earlier this year only verified collections turned up in search results. Documents on OpenSea’s site recommended after you create your collection you tweet the link to them or post it in their discord and they would then verify it."
"That got overwhelming quickly and the backlog became insane, so they changed to allow all collections in the search results, but buying from an unverified collection gives you a popup saying that OpenSea hasn’t had a chance to verify it yet. But due to the sheer numbers of listings being added every day you are much more likely to see that popup than not, so it’s become easily ignorable noise – just enough for OpenSea to waive responsibility for people who get scammed."
"Unfortunately it looked like 30 or 40 people had already fallen for the scam while it was active, and for those people there’s no way recourse or way to get their money back." "[B]ecause transactions happen instantly, even if a scam is found pretty quickly the money has already been transferred to the scammer with no way to get it back."
This is a global/international case not involving a specific country.
The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.
Include:
- Known history of when and how the service was started.
- What problems does the company or service claim to solve?
- What marketing materials were used by the firm or business?
- Audits performed, and excerpts that may have been included.
- Business registration documents shown (fake or legitimate).
- How were people recruited to participate?
- Public warnings and announcements prior to the event.
Don't Include:
- Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
- Anything that wasn't reasonably knowable at the time of the event.
There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.
The Reality
This sections is included if a case involved deception or information that was unknown at the time. Examples include:
- When the service was actually started (if different than the "official story").
- Who actually ran a service and their own personal history.
- How the service was structured behind the scenes. (For example, there was no "trading bot".)
- Details of what audits reported and how vulnerabilities were missed during auditing.
What Happened
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
| Date | Event | Description |
|---|---|---|
| August 7th, 2021 12:42:00 PM MDT | Main Event | Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here. |
Technical Details
This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?
Total Amount Lost
The total amount lost is unknown.
How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?
Immediate Reactions
How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?
Ultimate Outcome
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?
Total Amount Recovered
There do not appear to have been any funds recovered in this case.
What funds were recovered? What funds were reimbursed for those affected users?
Ongoing Developments
What parts of this case are still remaining to be concluded?
Individual Prevention Policies
No specific policies for individual prevention have yet been identified in this case.
For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.
Platform Prevention Policies
Policies for platforms to take to prevent this situation have not yet been selected in this case.
For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.
Regulatory Prevention Policies
No specific regulatory policies have yet been identified in this case.
For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.
References
- ↑ OpenSea And The Problem With Verification – Sean Bonner (Mar 21, 2022)
- ↑ @seanbonner Twitter (May 4, 2022)
- ↑ 24pxx Marketplace on OpenSea: Buy, sell, and explore digital assets (May 4, 2022)
- ↑ https://opensea.io/collection/24px (May 4, 2022)
- ↑ How OpenSea took over the NFT trade - The Verge (Mar 10, 2022)
- ↑ Dune Analytics (Mar 10, 2022)
- ↑ https://opensea.io/ (Mar 9, 2022)
- ↑ Meet OpenSea | The NFT marketplace with everything for everyone - YouTube (Mar 9, 2022)
- ↑ https://docs.opensea.io/docs (Mar 9, 2022)
- ↑ https://docs.opensea.io/docs/frequently-asked-questions (Mar 9, 2022)
- ↑ https://opensea.io/about (Mar 9, 2022)