OpenSea sued for $1 million over BoredApe theft

This may be the first lawsuit against Opensea due to the theft of NFTs.

In a lawsuit filed recently in federal court in Texas, Timothy McKimmy claims that he is

McKimmy claims that he never listed his BAYC NFT for sale, and that when the NFT was “stolen,” the “buyer” immediately resold it for 99 ETH (around $250,000 at current prices).

According to McKimmy, the NFT ranks in the top 14% in terms of rarity and is rarer than the NFT that Justin Bieber recently purchased for $1.3 million.

He is currently seeking "the return of the NFT or compensation for damages in excess of $1 million."

According to his LinkedIn profile, McKimmy is the CEO of an iron ore company in Texas. He claimed that OpenSea knew there were loopholes on the platform and the media had widely reported the loopholes, but OpenSea refused to stop platform transactions for the sake of profit.

In the complaint, OpenSea was accused of negligence and breach of contract, "Instead of shutting down its platform to address and correct these security issues, the defendant continued to operate. The defendant risked the security of its users' NFTs and digital vaults and continued to collect a 2.5% fee on each transaction without interruption."

McKimmy claims he repeatedly tried to resolve the issue by contacting OpenSea, but he believes OpenSea did nothing more while telling him it was “actively investigating” the incident.

McKimmy's case is not an isolated case. In January 2022, OpenSea issued approximately $1.8 million in refunds to users affected by the vulnerability, but it is not yet clear how the company handles refunds and determines the refund amounts. In his complaint, McKimmy cited discussions on the NFT forum, claiming that OpenSea has been approaching other victims of the vulnerability and offering them a "floor price" (the lowest price in the NFT collection), even if their specific NFT is worth more, and also requiring them to sign a confidentiality agreement.

OpenSea did not immediately respond to a request for comment on McKimmy's allegations.

The lawsuit was filed last Friday, and more people may follow in the future. A law firm in the northeastern United States is collecting more complaints from OpenSea users who lost NFTs due to the vulnerability to file a class action lawsuit.

Meanwhile, McKimmy claims that one of the goals of the lawsuit is to force OpenSea to strengthen its security practices.

The lawsuit states, "Plaintiffs file this lawsuit to protect the interests of NFT owners who reside in countries around the world and use Defendants' platform. Plaintiffs file this lawsuit to force Defendants to take adequate security measures and address known sensitivities in their interfaces."

The lawsuit comes at a difficult time for OpenSea, the world’s largest NFT platform. Prior to the discovery of a loophole that allowed people to buy valuable NFTs for as little as 0.01 ETH, an executive resigned amid allegations of insider trading.

Meanwhile, a new controversy has emerged this weekend related to a phishing incident in which OpenSea users’ NFTs were once again swindled away, but OpenSea says this was not caused by a vulnerability in the platform. OpenSea confirmed that the attack affected 17 users.