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Not all NFTs reported are stolen

Not all NFTs reported are stolen

NFT marketplaces like OpenSea often come under a lot of pressure to crack down on stolen or counterfeit NFTs, but there are many NFTs reported as stolen and yet sold. While the total number of stolen NFTs is not yet known, there are millions of dollars of high-value NFTs reported as stolen, and thus frozen from the OpenSea platform, even though some of them were not actually stolen. This is primarily a problem for high-value NFTs from popular groups, but it can happen to any NFT on the blockchain, and OpenSea has not yet adapted to distinguish between real theft and a ruthless merchant abusing the system.

What is OpenSea ?

 It is a Web3 marketplace built on Ethereum where users can insert non-fungible tokens (such as NFTs) into the blockchain (NFTs), bid on and buy them from each other. And OpenSea itself is a US-based company that has earned a controversial reputation in the Web3 space for exercising centralized control over its platform. Unlike community-owned decentralized competitors like Rarible and LooksRare, OpenSea is entirely owned and managed by a central team, and thus suffers from the same problems as other centralized platforms in dealing with malicious users. In an industry that champions decentralization and community ownership, OpenSea has always been a sore topic.

How much value was stolen from NFT ?

Decrypt recently detailed the estimated value of the big-name NFTs stolen as of early July, amounting to more than $25.4 million across 823 stolen NFTs. However, many tokens from the NFT pools (often worth millions) have not actually been stolen, but some malicious users still reported theft. Also, NFTs stolen at any point in their history are blocked from OpenSea until the user who submitted the claim is returned, permanently tarnishing their value. The reason this happens is because of the way NFTs and cryptocurrencies are stolen, which OpenSea can't do anything about.

How are blockchain assets stolen ?

There are many ways to steal blockchain assets, for example depending on the known information about the victim and their naivety about cryptocurrencies, but all methods require the victim to sign their property. And the easiest way to "steal" the NFT is to bid on the NFT in a different cryptocurrency (such as stablecoins) than the one listed. For example, placing a $3.5 bid (valued at $3.50) for a listed NFT for 3.5 ETH (valued at over $4000 as of publication), and if the seller doesn't pay attention they will accept the bid and sell the NFT at a steep discount. If the victim's email address is known, then they receive an email from "OpenSea" claiming there's a problem with their account, and three clicks later that sign out of their NFTs. There are several other ways to steal NFTs, such as Discord scams or scams. Counterfeit airdrops, but all ultimately depend on deceiving the victim to sign their property.

Is OpenSea secure ?

Users are rightly wondering if OpenSea is secure, and it may avoid the market altogether, but it has also brought many new users to NFTs. Being a centralized company, OpenSea must protect its users as a corporate entity is expected to: By direct intervention. Although this approach to problem management often leads to new problems that must be intervened, they have no other choice, because many users simply do not know much about encryption. The result is that a malicious NFT trader can sell their NFT to a buyer, report it stolen to OpenSea, buy it later for cheaper elsewhere, and report it back so they can sell it on OpenSea again. Twitter user/trader NFTfranklinisbored noted that the scheme took place on July 2.

What is the solution ?

 When purchasing an NFT, it is essential to check its history for more details on whether the NFT has been stolen, and especially to check its OpenSea page to see if it has a red “suspicious activity reported” banner before purchasing it. The only way to prevent theft is with healthy skepticism and on-chain safety practices, as the blockchain ensures that nothing, including NFTs, that have not been ceded by its owner can be stolen. 

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