NFT Theft Victims Beg for Centralized Saviors

'All My Apes Gone': NFT Theft Victims Beg for Centralized Rescuers

Bored Monkey Yacht Club # 9410

On the eve of the New Year, a tragedy struck Manhattan: Chelsea art gallery owner Todd Kramer owned 615 ETH (around $ 2.3 million) from NFT, mainly Bored Apes and Mutant Apes, stolen by crooks and listed on the NFT peer-to-peer marketplace OpenSea.

Kramer quickly took to Twitter and begged OpenSea and the NFT community to help him get his NFTs back. Unsurprisingly, he was torn to shreds by other members of the community for not storing his precious JPEGs in an offline wallet; however, OpenSea has frozen trading in stolen NFTs on its platform.

Just one more little commentators sharp outside that OpenSea’s intervention here – and in particular Kramer’s pleas for a centralized response – seemed to run counter to a key industry principle that often clashes with usability: the idea that “the code is law ”, and once your tokens are in someone else’s digital wallet, it’s game over. While OpenSea hasn’t actually reversed the transaction on the blockchain, it has blocked the sale of the stolen NFT on its own platform, which is the most popular market for NFTs.

“We take theft seriously and have policies in place to meet our obligations to the community and to discourage theft on our platform. We do not have the power to freeze or remove NFTs that exist on these blockchains, but we do disable the ability to use OpenSea to buy or sell stolen items. We have prioritized the creation of security tools and processes to combat theft on OpenSea, and we are actively deploying our customer support, trust and safety and site integrity efforts so that we can act faster to protect and empower our users. “

OpenSea, however, did not respond to why it froze trade in these NFTs and not other stolen ones just a few weeks ago which were announced on Twitter by Bored Ape Yacht Club and jungle monster owners of TVN.

OpenSea interventions, when they occur, leave some users behind. For example, another Twitter user told in a viral post how they unwittingly bought a stolen NFT on OpenSea for 1.5 ETH (around $ 5,000) to freeze it. OpenSea was not quick to help them, they said – although it’s not clear what the company could really do at this point – and the NFT Alien Frens project. refunded them 1 ETH.

In these and other cases, “self-sovereignty” is presented as an attempt to reframe what really happened. Yes, victims are ridiculed for falling prey to a hack or scam, should learn from their mistake by using cold storage, and in the best-case scenario be able to redeem them. NFT at a reduced price as they are not sold in major markets. But at least there was no centralized intervention. Kramer himself was be able to buy at least two of its NFTs with the help of users who had unwittingly bought them from the scammer.

Do you have a tip to share on digital wallet hacks or cryptocurrency scams? Please contact Edward Ongweso Jr via email (edward.ongweso@vice.com) or securely on Signal (202-642-8240).

OpenSea’s interventions in stolen NFT cases show how centralized intermediaries often have an important role wherever the decentralized blockchain world meets the real world. It is also not the first time that similar movements have occurred elsewhere in crypto, even if they break with the fundamental dogma of immutability and self-sovereignty.

In 2016, a hacker stole nearly $ 60 million worth of ETH – the equivalent of 5% of all ETH in circulation at the time – from a first DAO on Ethereum, simply called The DAO. To return ETH, the developers reversed the transaction and wiped it off the blockchain ledger with a hard fork, creating a new version of the blockchain. Users started using the new ledger that returned their ETH, while the original was dubbed Ethereum Classic (ETC) by people who bristled at the idea of ​​forking to save hacked funds. In 2019, when hackers stole 7,000 bitcoins from Binance’s crypto exchange, founder Changpeng Zhao suggested that a similar thing happen and that a hard fork be adopted to reverse the cyberattack.

Tether (USDT), a stablecoin that claims its currency is pegged 1: 1 to the US dollar, regularly “freezes” tokens at the behest of regulators or law enforcement. It only recently froze $ 1 million by blacklisting an Ethereum address, but also has a “recovery” mechanism that allows it to freeze an address where funds have been sent in error and issue new USDT.

Scams have always been a part of the cryptocurrency industry, as has the uncomfortable issue of centralized interventions. A recent study found that 50% of all tokens listed on the popular decentralized exchange Uniswap are straight-through scams. Last month, CoinDesk proudly championed OlympusDAO as the “future of money” while admitting in the first sentence of its defense that “Yes, this is a Ponzi scheme”. Scams and thefts in the decentralized financial space continued to escalate, reaching $ 14 billion in 2021.

It increasingly appears that the inconsistent application of rules in this space more often has the effect of protecting wealth transfer programs than of protecting all users equally, and obscuring the deep centralization already present: less one percent of users (institutional investors) make up 64 percent of Coinbase’s resources. trading volume, and 10 percent of traders account for 85 percent of NFT transactions and trade 97 percent of all NFTs at least once.

It is not known how this contradiction will be resolved. Believing indiscriminately that decentralization is a balm that immediately transforms the politics of something endangers not only users but also the dream of crypto disruption. Take the adoption of blockchain-based technology by investment banks and central banks. One way to look at this is a sign of crypto inevitability. If you look under the hood, however, it is more clearly a decision by financial institutions to bolster fiat and further centralize the global financial system.

As long as the contradiction persists and the uncritical belief is maintained, the crypto will find itself in an increasingly weak position to do anything about any of these concerns.

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