Former Bored Ape Owner Sues OpenSea for $1 Million in Damages

Timothy McKimmy, a Texas-based NFT (non-fungible token) collector, is suing OpenSea for US$1 million in damages after his Bored Ape #3475 was stolen from his crypto wallet.

McKimmy filed a lawsuit last week in the US District Court demanding OpenSea return his Bored Ape or pay US$1 million in damages.

On January 26, a bug found on the OpenSea platform allowed attackers to snap up NFTs at previously listed prices – well below current market prices. This was due to the sellers not delisting the item correctly by paying a gas fee.

McKimmy says he’s the owner of Bored Ape #3475, which was stolen during the attack and later listed for 225 ETH – or approximately US$592,000 at the time of writing.

Flaws in the Legal Glass

The lawsuit, however, has a couple of flaws. For starters, the plaintiff listed the defendant as OpenSea instead of the company’s legal identity, Ozone Networks. Ozone Networks is also based in Delaware – not in New York, as listed on the lawsuit.

These defects were pointed out by Twitter user exlawyernft:

5) So, the Plaintiff failed to even name the legal entity that he's suing. Para 2 of the Complaint says "… Defendant may be served via certified mail, return receipt requested, to its headquarters at 105 E.
24th St #4D, New York, NY 10010."

— exlawyer.eth/tez (@exlawyernft) February 21, 2022

OpenSea was ‘Aware of the Vulnerabilities’, Says McKimmy

As per the filing, McKimmy stated that OpenSea was fully aware of the vulnerabilities on its platform. If the case makes it to court, he’ll have to prove this in order to win.

As per the lawsuit:

Defendant’s security vulnerability allowed an outside party to illegally enter through OpenSea’s code and access Plaintiff’s NFT wallet, in order to list and sell Plaintiff’s Bored Ape at a literal fraction of the value (at .01 ETH). Essentially, OpenSea’s vulnerabilities allowed others to enter through its code and force the listing of an NFT.

McKimmy vs OpenSea, US District Court for the Southern District of Texas

Exlawyernft pointed out that “the negligence cause is a pretty good argument” – adding, however, that it will be interesting to see how “the jury interprets the blockchain”:

19) I particularly love the part about OS failing to reverse the transaction. Obviously, this isn't possible, but it will be interesting to see how a jury interprets the blockchain and its (by design) challenges with things like this.

— exlawyer.eth/tez (@exlawyernft) February 21, 2022