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April 6, 2022 10:02 pm

OpenSea 'Sitting On Ticking Bomb' As Lawsuits Pile Up Over Stolen Apes

An anonymous reader quotes a report from Motherboard: The NFT marketplace OpenSea is now facing at least three lawsuits over stolen cartoon apes after lawyers for a New York man filed a lawsuit in New York State Supreme Court claiming that his Bored Ape Yacht Club NFT was taken from him due to what he characterized as "security vulnerabilities" of the OpenSea platform. Lawyers unaffiliated with the cases told Motherboard that, whatever the merits of the individual suits, the situation has the potential to cause trouble for the $13 billion Web3 startup, often referred to as the "eBay of NFTs," as it could potentially reveal its inner workings and invite a torrent of other suits that the company will be forced to defend against. "I think they're sitting on a ticking bomb," said Max Dilendorf, a lawyer specializing in digital assets, cryptocurrency, and asset tokenization who is not involved in any of the Bored Ape lawsuits. The newest $1 million lawsuit, filed on behalf of Michael Vasile, is similar to another lawsuit filed in February by the same lawyers on behalf of an aggrieved Texas man. In both cases, the men say they lost their apes because of alleged bugs in OpenSea's code that the company knew about but did not take appropriate steps to fix. A third ape-related lawsuit, filed in the U.S. District Court for the District of Nevada and also naming the NFT marketplace LooksRare and Yuga Labs, the company behind the Bored Ape Yacht Club, claimed OpenSea did not "implement common sense and reasonable security measures'' against fraud and instead put "all the onus" on users. Altogether, the cases against OpenSea and other platforms could prove to be an arena where the courts figure out if the platform or the individual should be to blame when people lose thousands of dollars in a matter of seconds to illicit and irreversible blockchain scams. Regardless of the suits' merits, the unaffiliated lawyers said the OpenSea suits could place the popular NFT marketplace in a difficult position, as anything less than an all-out victory could invite a spate of similar lawsuits. Dilendorf added that OpenSea had reason to consider settling the case in order to avoid offering up the company's internal emails and documents during the discovery process. "I would not want to open up a Pandora's Box," Dilendorf said. "Because looking at how OpenSea operates the platform from a 10,000-foot view, it's very, very questionable."

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