OpenSea Adds Functionality For NFT Drops
OpenSea is the world’s first and largest NFT (Non-fungible token) marketplace. While the marketplace always allowed users to explore, sell, and purchase NFT’s, a new function has been added to support NFT drops.
NFT drops (releases) have, up to this point, been hosted on their own websites. This created many opportunities for scammers to take advantage of. A rug pull scheme consists of the NFT creators marketing to attract early investors, before abruptly and fully abandoning the project. Some malicious users will also try to scam legitimate NFT projects by creating websites that look just like the project's official websites. The scammers could recode minting machines that take funds
OpenSea announced a new function for hosting NFT drops on the OpenSea platform. The new function provides a bit of advertisement on their front page and allows projects to relay more information about their projects. OpenSea is currently featuring the drop of omgkirby’s Channel Tres collection (named omgkirby x Channel Tres). The banner advertisement takes up much of the landing page for OpenSea and features a countdown and a button to view the drop for more details.
NFT collections can now display all team members, frequently asked questions (FAQs), and the mint schedule for the collection. While this feature may not deter from rug pulls, it will help prevent users from purchasing NFTs through fraudulent websites. It will also provide NFT collectors an additional way to research projects prior to purchasing. Considering that OpenSea will be advertising some project drops on their homepage, it’s safe to assume that there will be checks in place.
One of the largest rug pulls occurred around January 2022, managing to pull 335 ETH (Ethereum), selling out all 8,888 NFTs at 0.4 ETH each. The project sold out in a few hours, then everything related to the project disappeared. The project's discord, minting website, and funds from the sale were nowhere to be found. The founders could not be reached. After two months of investigation by the Department of Justice, prosecutors arrested and charged the founders Ethan Nguyen (known as “Frostie”) and Andre Llacuna (known as “heyandre”).
The DOJ also filed charges against the rug pull performed by the Baller Ape Club project. Founder Le Anh Traun was charged with conspiracy to commit wire fraud and conspiracy to commit international money laundering. Traun quickly shut down all related sites and pulled the funds from the drop before attempting to disappear.
