According to blockchain analytics firm Elliptic, a defect in the largest marketplace for non-fungible tokens (NFTs), OpenSea, allowing customers to purchase at least $1.1 million worth of NFTs for substantially less than market pricing.
An NFT is a type of crypto asset that keeps track of who owns which digital data on the blockchain. With $4.8 billion in transactions thus far in January, OpenSea is the largest platform for speculators and enthusiasts to sell NFTs. find out more
However, a glitch in the system permitted people to purchase specific NFTs at old listing prices, despite the fact that the owner was unaware they were still available.
“This is not an exploit or a bug – it’s an issue that arises because of the nature of the blockchain,” an OpenSea spokesperson said in emailed comments.
“OpenSea cannot cancel listings on behalf of users. Instead, users must cancel their own listings.”
To address this, OpenSea claimed it was developing “a number of solutions,” including a dashboard that would allow customers to view and cancel their postings. It stated that affected users have been compensated.
“The exploit appeared to come from the fact that it was previously possible to re-list an NFT at a new price, without canceling the previous listing,” said Tom Robinson, chief scientist and co-founder at Elliptic.
“Those old listings are now being used to buy NFTs at prices specified in the past – often well below current market prices.”
On Monday, for example, an NFT of a cartoon ape from the Bored Ape Yacht Club collection, Bored Ape #9991, was purchased for 0.77 ether (about $1,747). Such NFTs usually sell for hundreds of thousands of dollars.
The Bored Ape Yacht Club is a collection of 10,000 algorithmically generated NFTs created by Yuga Labs in the United States.
According to blockchain records viewed on OpenSea, 20 minutes after Bored Ape #9991 was purchased for 0.77 ether, it was sold for 84.2 ether (about $189,040). The buyer made a profit of more than $187,000 on the transaction.
The original owner of the NFT’s original owner, who went by the handle “TBALLER.eth” (@T BALLER6) on Twitter, expressed their surprise at the transaction, which they claimed they did not authorize.
“Yooo guys! Idk (I don’t know) what just happened by why did my ape just sell for .77?????”
“I didn’t list me ape at all…. Now I’m seeing DMs (direct messages) it sold for .77??????”
Elliptic’s Robinson said he had found five accounts that had acquired at least 12 NFTs worth $1.1 million in this manner.
According to Robinson, one guy paid a total of $133,000 for seven NFTs by abusing the glitch, then swiftly selling them for $934,000.
The OpenSea issue may cause some purchasers to pause as celebrities and prominent brands flock to the NFT market, where sales volumes and prices of sought-after tokens have skyrocketed.
NFTs and “decentralised finance,” or “DeFi,” represent a new frontier in markets, with enormous sums of money bypassing traditional financial gatekeepers like banks.
In 2021, fraud and theft on DeFi platforms amounted to at least $10.5 billion. The Bank for International Settlements has cautioned that if DeFi develops traction, it could jeopardise financial stability.
OpenSea was formed in 2017 and was recently valued at $13.3 billion in a venture capital round.
(Adapted from EconomicTimes.com)