With the significant growth of the cryptocurrency industry, there have been numerous cases of scamming and thieving of non-fungible tokens (NFTs). It proves that NFTs are increasingly attractive targets, especially considering the sky-high prices that some of these tokens reach.
OpenSea, as the biggest NFT marketplace, has been the target of these thefts far too many times and tried to tackle the issue with relative success. Due to a large number of stolen NFTs on OpenSea, as well as the other major NFT marketplaces, OpenSea forced to adjust its stolen digital asset policy last August.
In this article, we discuss the steps to take if an NFT is stolen on OpenSea marketplace. Besides, we take a look at the updates of the stolen digital asset policy at OpenSea.
What is the current policy of OpenSea?
OpenSea runs a policy to penalize any users who trade a stolen NFT. As soon as an NFT is reported as stolen, OpenSea immediately disables the ability to buy, sell, or transfer the item on the platform. The ban continues until the owner reports the NFT being returned.
However, it is potential that an innocent person could be wrongfully punished if they unknowingly bought a stolen NFT. It will get more complicated if malicious individuals begin to flag stolen NFTs as suspicious tokens that were not stolen in the first place.
What happens if your items are stolen?
If you need to report items as stolen and, as the result, disable them from being bought or sold on OpenSea, you have to submit your request on the platform and the User Safety team helps with disabling the affected items.
A police report is required in order to verify the report of theft. NFT owners who are the victim of the theft will have to register a formal complaint with the police The report must be made within 7 calendar days after the event. This helps prevent scammers and thieves from making false reports. If no police report is received by OpenSea User Safety team, the items will be re-enabled on the marketplace.
As the police report is delivered to OpenSea, your items will be prevented from being bought or sold on the market. Meanwhile, your items remain on the blockchain and are not in the custody of OpenSea. It means that if funds and NFTs have been transferred out of your wallet, OpenSea is not able to recover the loss. Another limitation is that OpenSea cannot prevent your items from being bought, sold, or transferred to other marketplaces or non-OpenSea services.
What to do to prevent the problem?
The best way is to prevent a scam. To do so, it is important to investigate the history of an NFT at the time of buying. Although there are some ways to learn about the history of an NFT, the easiest is to check its OpenSea page to see if it has the “reported for suspicious activity” message. The only way to prevent buying a stolen NFT from a potential theft is to investigate any uncertainty and check for on-chain safety practices.
What happens if you buy a stolen NFT?
OpenSea gives a penalty to any user who buys stolen NFTs, as it is against US laws. The marketplace also emphasizes that buyers who unknowingly buy stolen items are also penalized. This seems to be a difficult issue the marketplaces face regularly.
Hackers usually steal stolen NFTs and list them on different marketplaces so that any user can buy the stolen NFTs. Since last July, NFT marketplaces have announced over $25.40 million worth of NFTs being marked suspicious. Though, many of the digital assets were not stolen but reported as ‘suspicious’ by malicious users.
It should be noted that when an NFT is reported stolen, the item is banned from OpenSea until the user who claims the police reports said the item or Items are returned.
News in NFT market includes cases where OpenSea was attacked by scammers. In one case scammers tried to use the Squiggles NFT project to defraud investors and sometime later YouTube investigator Coffeezilla fake NFT project was discovered in February. OpenSea responded by delisting the project and banning the users.
Besides, the OpenSea Discord channel was reported to be hacked in May. In this event, a link was posted to the Discord channel that led to a phishing site in partnership with YouTube. OpenSea support line investigated the situation, and hide the channel from users.
Although OpenSea, as well as all other NFT marketplaces, tries its best to support its users and ban hackers and scammers from the market, investors also need to be cautious while trading NFTs in marketplaces. The least to do is to read the transaction history of the NFT in the marketplace and check if it is marked suspicious.