OpenSea sued over ‘stolen’ NFT policy

Image: Shutterstock

Leading NFT marketplace OpenSea is being sued in a U.S. court over its policy on “stolen” NFTs.

Jesse Halfon, an attorney for NFTs and decentralised autonomous organisations (DAOs), has filed a lawsuit with the Small Claims Court in Michigan, demanding a “long overdue change” to OpenSea’s policy. 

According to the policy in question, OpenSea does not allow sale of items that are reported “stolen.” This term has been a subject of frustration among many users, particularly those who find their NFTs locked and barred from sale. 

Such cases often occur when the previous owners contact OpenSea and report their NFTs as stolen even though their current owners have acquired the tokens in legitimate ways. 

Halfon’s case may turn into a class action lawsuit as many users have asked to join in.

Yet, OpenSea’s term states, “All claims and disputes within the scope of the arbitration agreement must be arbitrated on an individual basis and not on a representative or collective class basis.” This may prevent class action lawsuits.

Halfon noted that while this term made class actions less likely, it was “not impossible.” He also hinted that he is looking for a solution by means other than class action lawsuits.

More than US$86 million worth of NFTs have been stolen as a result of hacking since 2020, according to a report published by cybersecurity information website Comparitech on August 5.

The number of NFT thefts has increased drastically this year. There were only two cases in 2020 when the industry started recording token thefts. The number rose to 14 cases in 2021 and then jumped to 150 cases in 2022.

The most serious case by the amount of dollars stolen at the time of the attack is Lympo, a sports-based NFT subsidiary of Hong Kong blockchain company Animoca Brands. In January 2022, 165.2 million LMT tokens worth approximately US$18.7 million were stolen.