When a Twitter (1) user claimed to have bought a stolen NFT, OpenSea (2) support promptly encouraged them to sell that same NFT on another marketplace. Later, in an OpenSea release, they acknowledged that the new regulation was based on American law (3), which forbids the sale of objects that have been intentionally stolen.

Although they were undoubtedly innocent, the market even acknowledged that, in some instances, purchasers of stolen NFTs were punished (4). The market recently changed its strategy to increase the use of police reports in response to similar instances occurring and the input from the NFT community.

In escalated conflicts, police records were previously used on the platform, but with the new upgrade, they will be used to corroborate all reports of stolen property on NFT platforms. The platform will eventually allow the exchange of the alleged NFT item again if a police complaint is not received within seven days to prevent fictitious reports.

Additionally, the organization attempted to make it simpler to reactivate the exchange functions after the stolen items are located. Furthermore, they mentioned that they are striving to automate threat and theft detection and are searching for solutions to address the fundamental causes of NFT theft.

Even though many users appreciated these actions, they encouraged other platforms to adopt a similar strategy and consider the specifics of regulations from various nations. Some community members are still unhappy with how the support is handling the problems when OpenSea advised selling the NFT right away to the user who accidentally bought the stolen NFT (5).

The NFT platform has since enabled additional security measures to shield customers from NFT scams. To ensure that only valid transactions will be accessible in the market, the features will also automatically conceal NFT transfers that are marked as suspicious.

Understanding OpenSea Policy

A little something to remember for all the policy wonks I know hacking shit together at the moment
Photo by Randy Tarampi / Unsplash

The sale of the stolen goods, according to OpenSea, will not be permitted because it violates their terms and conditions. OpenSea will eventually stop allowing people to buy, sell, or transfer anything via OpenSea once they are aware of a potentially stolen item. This is done to ensure that they are abiding by legal obligations and safeguarding users and their assets.

This policy aims to make OpenSea a reliable and secure marketplace. Given that it is against US law (6) to intentionally permit the sales and transfers of stolen property, OpenSea asserted that it was unwilling to encourage theft by permitting it on its platform to facilitate the sale of stolen property.

How can users report a stolen item?

If users want to report any stolen property so that it can no longer be exchanged or used, they should connect to OpenSea and post a ticket (7). The user safety team will then help you disable the offending property.

Additionally, OpenSea will request a police report within seven calendar days to validate the theft report. By doing this, criminal actors are deterred from filing false reports, and if they don't receive a report, the item will eventually be activated again on OpenSea.

If the user is the victim of the theft, they also have the option of re-enabling the item as soon as it is recovered. The user can then retract the complaint by submitting a ticket; in this case, no notarized declaration is necessary. Users must be aware that OpenSea can only save their things if they are on the OpenSea channel; otherwise, if they are lost or cannot be accessed by the marketplace, they will remain on the blockchain and are not in OpenSea's control.

This means that once funds or NFTs are transferred outside of a wallet, OpenSea won't be able to get them back. Once it is removed from the market, OpenSea will likewise be powerless to prevent its purchase, sale, or exchange through other marketplaces like quik.com, which is an NFT domain name marketplace, non-OpenSea services, or even through direct interaction via blockchain.

What to do if the account is compromised?

The recommended course of action is moving your remaining assets to a non-compromised wallet, utilizing the tools available, such as Etherscan (8) and wallets like MetaMask (9), if the user suspects that the account has been compromised.

Also, to stop unscrupulous actors from causing more harm, users can freeze their OpenSea accounts, preventing them from purchasing, selling, or transferring anything from the hacked wallet using OpenSea.

Why do NFT scams occur?

Scams have been a part of human civilization for years. While using computer networks and the internet had many advantages, they also brought various scamming strategies. Every advancement in technology gives crooks a chance to take advantage of it, and the hype surrounding the NFT industry is a big contributor to the frequent occurrence of fraud in this industry.

The hysteria and popularity NFTs experienced eventually attracted scam attacks and hackers as a new method of exploiting services and destabilizing human minds. But just as every action has a corresponding reaction, there are ways that hackers can attack. Still, they can only do so by using our actions as users, such as responding to suspicious links or opening spam emails, which gives hackers easy access to our holdings.

Photo by Jason Dent / Unsplash

Similarly, disclosing private or wallet key information on a copy-and-paste board or in any other manner also makes it possible for scammers to target users’ key access easily. Because many projects take steps to protect their artwork.

A secondary market of trade and provenance of ownership is made possible by marketplaces and protocols, and it is important to ensure that their smart contracts are secure against abuse. Recognize that draining NFTs during the process and selling them on the secondary market is a loss for the service provider as well as the artist and holder.

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