OpenSea To Step Up Efforts in Preventing Scams and Thefts

Days after NFT trading platform OpenSea’s former executive was charged for insider trading of digital assets, the company’s co-founder and CEO Derin Finzer has committed to step up efforts in preventing thefts, scams, and IP infringements on the marketplace.

Finzer in a blog post said while plagiarism, IP infringements, and thefts are prohibited under OpenSea’s Terms, “at our scale, comprehensive policies aren’t enough.”

He said the company recently launched a new verification system that identifies authentic accounts and content more prominently to keep scammers out and that OpenSea’s copy mint prevention system is the most sophisticated spam and fraud reduction tool the company has built.

“It uses image recognition technology to scan NFTs and identify potential duplicates – including flips, rotations, and other permutations,” Finzer said.

Earlier this month, Nathaniel Chastain, OpenSea’s former head of product was charged by the United States Department of Justice with one count of wire fraud and one count of money laundering.

According to the Department of Justice, from June 2021 to September 2021, Chastain used OpenSea’s confidential business information about what NFTs were going to be featured on its homepage to secretly purchase dozens of NFTs shortly before they were featured.

Finzer said the next step in OpenSea’s battle against thefts and scams will be to automatically hide suspicious NFT transfers, to lower their visibility on individual profile pages. 

“Though malicious transfers will always exist on public blockchains, we want to hide them from view on OpenSea,” he said.

He further said the next quarter will be spent on building proactive solutions for copyright infringements, like creating greater protections around transferred NFTs, reducing spam, and partnering with third parties and creators of all sizes.

“We’ve begun working with key rights holders to build image-detection models for automatic takedowns, and will expand this work tremendously in the coming months,” he said.

To scale review and moderation, OpenSea has established a dedicated moderation team and is adding critical auto-detection methods for copyright issues and other vectors of fraud, the co-founder said.