Sometimes it takes a while for the predictions made on CoinGeek to come true, and sometimes they happen much faster than expected. Last year, during the height of NFT mania, we told you that the feverish stampede into NFTs would lead to a tidal wave of lawsuits over digital rights, fraudulent behavior, and who owns what in the NFT world.
We didn’t have to wait long for this prediction to come true. Recently, a Texas man has filed suit against OpenSea for damages after his rare Bored Ape NFT was sold without his consent on the platform. He claims this was caused by an exploit that OpenSea was well aware of.
Who is Timothy McKimmy, and why is he suing OpenSea?
- Timothy McKimmy bought a rare Bored Ape NFT (#3475) on OpenSea for 0.01 ETH or around $26 at the time.
- His Bored Ape NFT was sold for 99 ETH (around $250,000 today) due to an exploit in OpenSea. He claims he did not put it up for sale.
- The Bored Ape NFT in question is extremely rare. Justin Bieber recently paid $1.29 million for one that is not even as rare as McKimmy’s NFT.
- He’s seeking either the return of his Bored Ape NFT or at least $1 million in damages.
- The Texan iron ore executive claims OpenSea knew about the exploit and didn’t fix it, putting trading profits ahead of platform security.
OpenSea collects 2.5% of every transaction, and McKimmy claims it put collecting these fees above the security of its users’ NFTs. The lawsuit accuses OpenSea of breach of contract and negligence. McKimmy also claims he repeatedly tried to bring the exploit to the attention of OpenSea. They replied that they were actively investigating but ultimately didn’t rectify the issue, according to McKimmy.
Why digital assets cannot escape the law
This is the first of what will likely be a raft of lawsuits surrounding NFTs. Aside from the people believing they are literally buying rare NBA and other sports footage, but who are in fact buying nothing of the sort, more victims are likely to come forward as their highly valuable NFTs are stolen from platforms. Indeed, one U.S. law firm is already looking for other victims to bring a class-action lawsuit against OpenSea.
In the industry, it hasn’t sunk in yet that property rights exist both in the physical and virtual worlds. It doesn’t matter if it’s a car or a Bored Ape NFT; if you can prove ownership, it belongs to you, and stolen property can be retrieved. Furthermore, Dr. Craig Wright and others have long since claimed that developers such as those involved in OpenSea, Blockstream, and others, are liable for things such as ignoring exploits that end up costing users.
Slowly but surely, the digital asset industry is waking up to the fact that the long arm of the law extends into the digital realm. Having possession of an item does not make it yours. As this Bored Ape NFT case will likely demonstrate, ownership of property is proven in real-world courts and not by having a certain item in one’s possession at a given time.
The most secure blockchain to develop on is BSV
Of course, it would be better if cases like this could be avoided in the first place. It would save a lot of grief and headaches, not to mention money in the form of fees, if developers launched their platforms and applications on secure blockchains that work within the law. Right now, only BSV fits that bill. Aside from its superior scaling capabilities and extremely low fees, BSV is the only blockchain on which actual NFT data is stored on-chain forever.
Ethereum supporters are seeing the value of writing data on-chain for social, gamefi and NFTs.
This is only possible on Bitcoin BSV. https://t.co/mHEehEdKdx
— Hector Lopez (@hlopez_) February 23, 2022
While NFTs on platforms like OpenSea are not stored on the Ethereum blockchain, on BSV, they’re stored immutably on-chain. What’s more, there’s an unbroken, time-stamped tamper-proof record or ‘log’ every time any digital asset changes hands. This makes it much easier to prove ownership, identify exactly when assets are stolen and where they moved to (should that happen), and since BSV is determined from the outset to work within the law, it also makes it much easier for users to recover stolen assets.
Sooner or later, every serious player involved in the digital asset industry is going to realize that a secure blockchain that enables them to both prove ownership of and recover their digital assets is the only way forward. While ideas of digital currencies and items outside of the control of governments and the law are romantic, the reality is that they’d leave people like Timothy McKimmy with nowhere to turn and nobody on the hook to make him whole.
As we evolve past the ‘stick it to the man’ phase of blockchain and digital currencies and embrace the massive value and utility they can create, more and more people are going to realize that BSV is the only option.
Watch: CoinGeek New York panel, Licensing IP for NFTS: Graphic Novels, Comic Books & Brands
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