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$1.7 Million USD Stolen In OpenSea Phishing Hack

Floor Tracker, WSJ NGMI, NFT Project Breakdowns

February 22, 2022

Welcome to The Drop NFT Newsletter. Subscribe and join the discord for breaking NFT news, project breakdowns, & artist spotlights. Thank you for following along on this journey!

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What's Dropping ⚡

  • Catblox Studios, announces a partnership with Puma that sends everyone into a buying frenzy (more details below). Gutter Cat Gang also follows suit.'

  • FTX announces that they are coming out with FTX Gaming which is a new unit focused on integrating blockchain technology and NFTs into video games. Read more here.

  • Wonderpals has been making some waves on Twitter and is launching on Saturday, Feb 26th.

  • Superstars NFT led by famous TikTok duo Party Shirt sneaked their art into the LA County Museum of Art. Watch the hilarious video here.

  • NFT Worlds has been MOVING and flipped Mutant Ape Yacht Club today. The floor currently sits (at the time of writing) at 15.35 ETH.

  • Shadow Quest, the newest entry in the P2E space, completely sold out their pre-sale. Clearly, the folks behind it are wizards because gas prices for minting 10 averaged $23.50 (not even each, for ALL 10).

  • Coinbase CEO and CMO in hot water after getting caught in their own web of lies about who came up with the QR code Super Bowl ad (hint: it wasn't either of them).

OpenSea Phishing Hack Chaos đź•µď¸Ź

Back in the early 2010s, there was a notorious scam going around that became known as “phishing”. This scam consisted of hackers sending you an email that looked like it came from your bank or lender with the purpose of capturing your account login details. Not only was this scam very sophisticated, but it also opened society’s eyes to the dangers of not doing their due diligence before clicking on an email and logging into a website. It also showed the real vulnerabilities in the relationship of man and technology. It seems like that scamming method has now been introduced into the NFT space.

While the CTO of OpenSea was on stage at ETHDenver, news started to break out a hack that had taken place on the platform. But this hack was not due to any wrongdoing by OpenSea, like in recent times. About 28 days before stealing the assets (January 22nd), the hacker created a malicious contract. Then, the hacker started sending OpenSea phishing emails to users in order to gain their signatures. The signature request that the hacker placed essentially gave the hacker the right to buy your NFT for free. This hacked contract then lay dormant with that information, casting a wide net before flushing assets from unsuspecting victims. With signatures in hand, the hacker was able to create a singular transaction that used “call-data” from the previous contract to confirm the transaction. All in all, approximately $1.7 million USD in value was extracted in the attack.

With methods like Tornado Cash being employed, it’s hard to track where the money went/came from, and who was responsible for this despicable act. But, with Etherscan, people have been able to find more information in the past few days. One Twitter user, in particular, has created a PDF that will show you the web of transactions that were made with the hacker’s wallet in order to set this plan into place. And according to the map created by charliemarketplace.eth, there are more pieces to this puzzle than first thought. With methods such as KYC employed by services such as Coinbase and Kraken, these people will be found. But one question that people haven’t asked is, how did the hacker gain a list of the emails that were connected to individuals’ OpenSea accounts for notifications? Was it from OpenSea’s backdoor directory, or was it from a WL? More information will be available in the coming days and weeks, and we’ll see who/what the real culprit is/was. In the meantime, you should revoke your approvals on either revoke.cash or Etherscan. Hackers don’t sleep. Stay safe. WAGMI.

WSJ Claims NFTs Are MLMs 

An article from the Wall Street Journal (WSJ) was published this weekend that proclaimed NFT’s are essentially multilevel marketing schemes aimed at a new generation. The term “pyramid scheme” is frequently tossed about by skeptics, so I think it’s time to break down the factors behind this claim.

What a traditional MLM scheme looks like

Multilevel marketing (MLM) is a controversial sales tactic used by businesses to eliminate marketing costs. By offering a tier-based commission system, employees seemingly function as if they are self-employed, buy into the business, work their way up the financial ladder as they sell the product or services, and subsequently recruit more sellers into the business A you will see in the graphic above. In short, the WSJ article suggests that celebrities such as Tom Brady and other cryptocurrency supporters are “pumping their own bags” while trying to get more and more users into the crypto market. The WSJ argues that this gold-rush mentality will only create success for those at the top of the food chain, yet lead to failure and losses for the majority of common folk.

Rolling Stone

Their guiding principles seem valid at first, but largely undermine the actual use-cases that are being derived from this technology. For example, suggesting the technology that offers a musician the opportunity to finally profit from their own music sales without getting robbed by a production company isn't an MLM scheme, it's an injustice. This decentralized, technological terrain is being navigated at scale. While there are many bad actors in the space (as you will find in most all financial and digital sectors), It is unfair to suggest that NFT’s are a multi-level marketing scheme in such a blanket manner. The innovative among us are searching out the best use-cases for this new technology, and speculators (who may pay little attention to the fundamental value) are focusing on benefiting from price movements. This is where we find a discrepancy in technology and economics. This type of criticism from the WSJ is necessary to remind long-term investors and innovators alike to focus on where the space is going, avoid becoming mindlessly caught up in the hype, and reflect upon how the technology can best be used to serve the people at the bottom as equally as those at the top.

Weather Report: Thunderstorms & Drama

Meme Drop đź’§

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NFT Buzz Project Breakdowns

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Disclaimer: The Drop DOES NOT provide financial advice. All content is for informational purposes only. The Drop is not a registered investment, legal, or tax advisor or a broker/dealer. Trading any crypto-related asset is extremely risky and could result in significant capital losses.  

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