A BAYC Holder Filed A $1 Million Against Opensea

[TL;DR]

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Timothy McKimmy is filing a lawsuit against Opensea for $1 million after his Bored Ape NFT was sold for 0.01 ETH, a small fraction of the market price. According to the plaintiff, a bug on the Opensea platform allowed inactive listings to be sold. He is seeking the return of the NFT, Bored Ape #3475, and $1 million in damages.

The NFT in question is currently on sale for 225 ETH on the Opensea platform. According to McKimmy, the NFT was in the top 14% percentile and had worth in the region of $1 million.


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The suit, which McKimmy filed at the US District Court for the Southern District of Texas, Houston Division, claims that OpenSea was aware of the vulnerabilities on their platform. McKimmy claims that despite having full knowledge of the security issues, Opensea did not inform its users or put security measures in place. The plaintiff claims that the lowest selling NFT in the Bored Ape Yacht Club goes for 98 ETH.

Facts Behind the Case

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Here are some of the facts behind the case, which has been filed before the US District Court for the Southern District of Texas, Houston Division

• The plaintiff is Mr. Timothy McKimmy, a resident of Texas.
• The defendant in the case is Opensea. However, the legal identity of Opensea is Ozone Networks Inc, according to Opensea's term of service.
• The plaintiff recruited two attorneys, Andrew Dao and Ash Tadghighi.
• The Bored Ape Yacht Club (BAYC) consists of 10,000 unique NFTs. Owners of the collection are guaranteed membership to the exclusive Ape Club.
• Opensea has handled over $11 billion in sales in just over four years.
• According to the plaintiff, on the 7th of February, Bored Ape #3475, which was under the plaintiff's ownership, was "stolen, listed, and sold to another individual" on Opensea.
• The plaintiff's argument states that he did not list his Bored Ape for sale on Opensea and that a security breach allowed a hacker to gain access to Opensea's backend and enter into his (plaintiff's) NFT wallet. The hacker then sold his Bored Ape for 0.01 ETH, approximately $26.
• After the NFT was bought/sold for 0.01 ETH, the fraudsters immediately sold it for 99 ETH on the Opensea platform.
• McKimmy stated that he discovered the sale via a Twitter account @boredapebot that tweeted, "Bored Ape #3475 was purchased for 0.01 WETH."
• McKimmy claims that before filing the lawsuit, he tried to resolve the issue with Opensea; however, the NFT platform ignored him, and they failed to reverse the transaction.
• The plaintiff also claims that he tried to resolve the case with the current owner of the NFT. However, the individual failed to return it.
• According to the plaintiff, Bored Ape #3001, which Justin Bieber purchased for 500 ETH ($1.3 million), had a rarity score of 53.66 and a rarity rank of #9777. However, the NFT in question, Bored Ape #3475, had a rarity score of 138.52 and a rank of #1392. This figure placed the NFT within the top 14% rarity percentile.
• According to the plaintiff, the lawsuit aims to protect the users of Opensea worldwide by ensuring that Opensea enacts security measures and fixes the breaches in their system.

The plaintiff may have a legitimate case; however, his lawyers puncture holes in the case. The lawyers filed the lawsuit with the wrong name and address for the defendant (Opensea).

Controversies at Opensea

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Opensea, the world's leading marketplace for NFTs, has its share of controversies. One of such incidents was in September 2021 when their Head of Product was accused of insider trading in the sales of different NFTs on their platform, according to a Tech Crunch report. The report noted that Opensea did not have any regulations concerning their employees carrying out insider trading on their platform.

Timothy McKimmy recorded this issue in his case against Opensea as part of the case's factual background.

Another controversy that hit Opensea is the rising case of NFT theft on their platform. A Twitter user @NFTtheft who documents plagiarism and theft cases in the NFT world says this in a tweet.

"OpenSea has been protecting scammers & rejecting legitimate DMCA takedown requests from artists, so now artists are going straight to OpenSea's hosting provider to successfully get their art removed. Don't let OpenSea steal your work!"

In Opensea's defense, due to the daily activities on the platform, it is doubtful that they will eradicate the problem of stolen NFTs. However, they can hasten their pace in dealing with the issue, as many artists have recorded their observations about Opensea's slow response to takedown requests. In this report by Petapixel, there were reports of different NFT theft cases in which Opensea failed to take adequate action.

Conclusion

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Conclusively, Timothy McKimmy against Opensea is the first of a kind. The case's outcome will be an important factor in Opensea's regulatory framework. It may force their hands to take swifter actions against theft on their platform.



Author: Gate.io Observer: M. Olatunji
Disclaimer:
* This article represents only the views of the observers and does not constitute any investment suggestions.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.

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