NFT Theft Is On The Rise

NFT theft is on the rise which doesn't bode well for one key marketplace.

By Joseph Farago | Published

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For platforms that monitor NFT exchanges, nefarious acts have been occurring left and right. A specific crypto marketplace has received three different lawsuits and numerous complaints surrounding the theft of cartoon ape tokens. These tokens, which cost thousands of US dollars, have become the pillar stone of the cryptocurrency community, making the apes highly susceptible to thieves.

One New York resident has filed the three lawsuits, blaming the crypto marketplace OpenSea for NFT theft. They claim that their Bored Ape Yacht Club NFT, which costs anywhere from a quarter of a million dollars to almost a full million, was taken unjustly through “security vulnerabilities” in the online marketplace. The lawsuits were filed in the New York Supreme Court system, documenting the plaintiff’s frustration at the marketplace’s possible culpability.

Lawyers who aren’t affiliated with the pending lawsuits say that the commotion can cause significant damage to the NFT marketplace OpenSea. Known as the “eBay of NFTs,” a slight stumble could cause this $13 billion startup to drop in value drastically. Lawyers also speculate that this complaint could open up the flood gates for more suits, exposing faultiness or other NFT thefts over the past year. With these tokens costing unimaginable amounts of money, the stakes are high in the cryptocurrency game, and any minor breach could be a catalyst for legal action.

These lawsuits follow a similar case that occurred in February 2022. A Texas resident experienced the NFT theft of his Bored Ape token, referring to a possible bug in OpenSea’s code that exposed his assets. The claim that OpenSea’s website isn’t as safe as it intends to be is identical to the aforementioned New York lawsuit. If many users recognize bugs in OpenSea’s platform, more situations could be disclosed where NFT owners experienced vulnerabilities on the site.

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For American court systems, NFT theft is an entirely new frontier. These lawsuits could ultimately determine whether platforms specializing in crypto exchanges should be fully responsible for protecting users’ assets or if the onus should be placed on the individual. Especially in the case of an intentional scam, the courts will be deciding how an NFT can be replaced or if the individual is eligible for financial compensation. Needless to say, these decisions could change the face of NFT markets forever.

A lawyer for the New York case stated that OpenSea should be held responsible for allowing hackers to enter the plaintiff’s blockchain. Through a bug in the site, the scammer was able to force the sale of the Bored Ape NFT, flipping the price for a higher bargain in the next sale. The lawyer claims that the NFT theft has everything to do with OpenSea failures, not the dubiousness of the individual hacker. With such expensive tokens on the line, the lawsuit intends to bring justice to the plaintiff, who lost thousands of dollars in seconds.

Bitcoin and NFTs are a beguiling concept leaving many judiciaries and legislators perplexed. Especially when it comes to such a new crime as NFT theft, the outcome of these lawsuits will define how future crypto data breaches will be handled.