NFT marketplace OpenSea has reimbursed about $1.8 million USD to its users after a mechanism on the site was exploited and allowed people to buy and flip NFTs for cheap.
Earlier this week, a number of blue-chip NFTs, including Bored Ape Yacht Club, Mutant Ape Yacht Club, Cool Cats and Cyberkongz, were resold for well-below market value without the seller’s knowledge.
The issue was initially dubbed a bug, but OpenSea has since explained that the debacle was caused by a mechanism that had been exploited by savvy traders.
GM ?
This is the first edition of weekly threads we’ll be doing to announce platform updates to the OpenSea community.
Let’s dive in!
— OpenSea Support (@opensea_support) January 28, 2022
“When a user transfers an NFT out of a wallet (“Wallet 0xABC123”) while a listing is active, that listing is not automatically canceled — and if the user transfers the NFT back into Wallet 0xABC123, that listing will still be active,” the company explained in a blog post on Thursday. “In some cases, that listing may now be for an amount below the current floor price for NFTs in that collection.”
OpenSea said that while the feature allows users to completely control their listings and cancellations, it also creates risk when orders are uncancelled before transferring an NFT.
The company has built out a number of improvements to prevent people from taking advantage of this mechanism, including changing the default listing duration from six months to one month; building a dashboard into the user profile where a user can see all of their listings and cancel any that are no longer relevant; and creating an alert to flag when a user transfers an NFT out of their wallet that has an active listing associated with it.
“Our support team has also been working tirelessly to reach out to affected users and reimburse them until our product experience can make this risk clearer,” OpenSea said. Fortune reports that the company has refunded a total of 750 Ether for 130 wallet items.
In other news, two of Picasso’s heirs are selling NFTs inspired by never-before-seen artwork.
wazup.