The OpenSea NFT buying/selling platform is temporarily closed. The one week period granted to users to migrate their non-fungible tokens (NFT) ended on February 25, 2022. The famous marketplace announced that from this date, some features of the site could be temporarily unavailable due to the migration of their smart contract. With the flaw discovered a short time ago, this is a lesser evil!
NFT change their smart contract
On Saturday 19 February, OpenSea launched a new smart contract. The marketplace asked its users to begin migrating their NFTs from the old contract to the new one. The platform announced that the update would bring new features by ensuring that all inactive listings would expire.
However, a few hours after the announcement, the platform reported phishing attacks resulting in some users losing their NFTs. Following this, the OpenSea team launched an investigation to find out what happened. Devin Finzer, co-founder of OpenSea, encouraged affected users to contact the support team.
The Mintable NFT platform has pledged to return the NFTs that were stolen in the recent OpenSea breach. Indeed, the team noticed that some of the lost NFTs were listed on another marketplace called LooksRare. Mintable decided to buy the NFTs and return them to their original owners.
On Friday, February 25, 2022, the migration of OpenSea contracts ended. The platform informed users that some active listings on the site may be invisible. They also warned that floor prices for NFT collections may vary. However, the platform said this would only be temporary. To protect sellers, OpenSea has temporarily disabled bidding and buying until the migration is complete.
Security in a growing industry
Non-fungible tokens (NFTs) have taken the world by storm. This massive boom is leading to widespread interest and greater adoption of cryptocurrency. According to blockchain analytics firm Chainalysis, NFT’s popularity has skyrocketed in 2021. Chainalysis’ “NFT Market Report” reports a minimum of $44.2 billion in cryptocurrency sent to Ethereum smart contracts linked to NFT marketplaces and collections last year. In 2020, the value of cryptos sent to smart contracts that relate to NFTs was $106 million.
Scams and fraudulent activity have been creeping into the NFT space in an increasing manner. OpenSea recently announced that its free mint tool was subject to abuse. In fact, 80% of NFTs created using the platform are said to be either plagiarized, fake or spam. As if that wasn’t enough, an article by Chainalysis also revealed that this sector was highly prone to money laundering.
Criminals use non-fungible tokens (NFT) to launder their dirty money.
A seller who is also the buyer of an NFT easily paints a misleading picture of the value and liquidity of an asset. As wash trading becomes more prevalent on marketplaces, solutions are being developed to detect fraudulent activity. Chainalysis, for example, has created a tool that can detect individuals who self-fund their own wallets to make deceptive trades.
“Using Chainalysis software, we can see when someone buys a token using funds from the same person who sold them that same token. That’s the definition of wash trading.”
Kim Grauer, head of research at Chainalysis
Whether OpenSea updates its smart contracts, the community will still remain vigilant about NFTs. The YouTuber Coffeezilla and his community have recently demonstrated this. They have indeed stopped a scam potentially targeting 20 million dollars of digital assets.
