OpenSea’s Woes Getting Worse With Impending $1M Lawsuit

OpenSea’s Woes Getting Worse With Impending $1M Lawsuit

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The NFT marketplace has been named in a $1 million lawsuit filed by an individual who allegedly lost his Bored Ape Yacht Club NFT due to a bug in the code.

OpenSea In Hot Waters With Lawsuit

Texas resident Timothy McKimmy has sued OpenSea, claiming negligence and breach of fiduciary duty due to a phishing attack on the marketplace that saw millions of dollars of loss in stolen NFTs. In a complaint filed in the Texas federal court on February 18, McKimmy has reported that despite not listing his Bored Ape Yacht Club NFT for sale, it was purchased, unbeknownst to him, at the meager amount of 0.01 ETH (around $26). For context, a BAYC NFT usually sells for hundreds of thousands of dollars. Soon after, the “buyer” resold the NFT for a whopping 99 ETH (around $250,000). 

Texas Resident Claims Breach Of Contract

McKimmy, who is reportedly the CEO of a Texas-based iron ore firm, claimed that OpenSea was aware of the bug in the code, which allowed hackers to buy NFTs at a fraction of the cost and did not take necessary action to prevent it or warn users. Despite being widely reported in the media, the marketplace did not halt tradings for the sake of profits, McKimmy states. 

The lawsuit report reads, 

“Instead of shutting down its platform to address and rectify these security issues, Defendant continued to operate. Defendant risked the security of its users’ NFTs and digital vaults to continue collecting 2.5% of every transaction uninterrupted,"

Allegedly, McKimmy has made repeated efforts to resolve the issue with the OpenSea team, who have not shown much impetus beyond stating that it is actively investigating the matter. 

He also claimed that the NFT was one of the top 14th percentiles NFTs in terms of rarity and is even more valuable than Justin Bieber's recently purchased for $1.3 million BAYC NFT. In his lawsuit, McKimmy is seeking the return of the NFT and/or damages over $1 million.

Rumors Of Shady Reimbursements

Back in January, the marketplace has already issued around $1.8 million worth of refunds to a few users who have been targeted in the attack. However, the thought process and the fund allocation of reimbursements from OpenSea are still not quite clear. There have been rumors circling in NFT forums claiming that victims of the hack have been offered the floor price or the lowest price in the NFT collection by OpenSea, irrespective of the actual worth of the lost NFT. Additionally, rumors of a non-disclosure agreement have also been circulating among these forums. Few people have alleged that OpenSea is offering only the floor price and that too not before victims sign an NDA. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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