OpenSea requires users to file police reports on stolen items as part of policy revamp

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Leading NFT marketplace OpenSea has announced a revamp of its policy on “stolen” items, a measure said to have barred legitimate transactions, by requiring users to file a report with police to support their claims. 

Under the revamped policy, users are required to make a report to police within 7 days after reporting an item as “stolen” on the marketplace, OpenSea announced on its Twitter on August 11. 

Previously, items reported as “stolen” would be locked and barred from any sale on the platform. As a result, some buyers who unknowingly purchased a stolen item at no fault of their own were inadvertently penalised.

Under the new policy, the platform will re-enable buying and selling for the reported item if no police report is received within 7 days. OpenSea said this was designed to help prevent false reports.

It is also making it easier for users who reported an item stolen to re-enable buying and selling when they recover the item, or decide that they should withdraw their stolen item reports, OpenSea said.

The leading marketplace said it acknowledged that side effects of its original policy had damaged users’ trust in the platform in some cases. “We’ve failed to proactively and transparently communicate the rationale behind our approach.”

The latest developments came after attorney Jesse Halfon filed a lawsuit against OpenSea in a U.S. court earlier this month to demand a change to the stolen item policy on the platform. 

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.