OpenSea Back in the News with $1.8m ETH Refund

OpenSea has had plenty of crypto air time in recent weeks. A surge in NFT market place activity has seen OpenSea come into the limelight at the turn of the year. There have been some negative stories, however, which raise the prospects of NFT market regulatory oversight.

On Friday, news had hit the wires of an OpenSea community backlash over its decision to reduce the number of mints an NFT creator can make. A reduction to 50 mints was reportedly short-lived due to a community outcry. Creators can mint NFTs on the Ethereum (ETH) and Polygon (MATIC) blockchains.

Late last year, we had reported of a $2.2m NFT theft that resulted in OpenSea freezing the NFTs on its NFT market place. At the time, OpenSea’s intervention raised concerns over decentralization. The market place highlighted that OpenSea’s move was a break from the ethos of decentralization.

Last week’s response to the Community, however, was a reflection of decentralization at its best.

The OpenSea Refund

Overnight, news hit the wires of OpenSea refunding 750 ETH to users who had succumbed to NFT exploits. In fiat terms, OpenSea reimbursed around $1.8m to users who unwittingly sold NFTs at old prices. The sales prices were well below prevailing market rates.

The exploit in question involved thieves buying NFTs by funding crypto wallet addresses to purchase NFTs from holders that had inactive listings without expiration dates.

For OpenSea and the NFT market, the exploits are certainly a negative. Earlier in the month, OpenSea had raised $300m in series C funding. At the time, OpenSea stated 4 goals for the funding,

• Accelerate product development.
• Improve customer support and safety.
• Invest in the wider NFT and Web3 community.
• Grow the OpenSea team.

Increased Government Scrutiny over Non-Fungible Tokens

While crypto exchanges and the broader crypto market have borne the brunt of increased regulatory chatter, the NFT market has not been left untouched.

At the start of the year, the UK government members of Parliament (MPs) called on the UK government to impose tougher regulations on cryptos and NFTs. According to the report, “the UK’s Treasury Department is currently preparing a response on how best to regulate the cryptocurrency market”.

The calls from MPs follow on from a call by the Bank of England in December for a global regulatory framework to regulate the crypto market.

Since then, news hit the wires of India’s central bank (RBI) creating a FINTECH division to keep up with cryptos, including NFT and new crypto launches. India and the UK are not alone, with China’s central bank having been vocal about NFTs and the Metaverse.

With the Biden administration due to issue a White House Executive Order on cryptos in the coming weeks, scrutiny is likely to intensify.

For NFTs and the NFT market place, tighter controls can only be a good thing. Trading volumes across NFT market places continue to surge, with new players also entering the space. In recent weeks, reports point to a record year ahead for the NFT market.