Bored Ape Yacht Club Theft Underscores Rising Risk of NFT Ownership

Bored Ape Yacht Club Theft Underscores
Illustration: VIP+: Adobe Stock

Yet another theft of digital assets has roiled one of the biggest NFT communities.

Bored Ape Yacht Club experienced a barrage of phishing attacks on its Discord server over the weekend after its community manager’s account was compromised.

Per BAYC developer Yuga Labs, the attacker made off with 200 Ethereum (ETH) worth of NFTs from members of the server, which amounts to around $360,000 lost for the popular digital assets that portray cartoon apes created by algorithms that customize each ape into a unique image owned by a single rights holder.

News of such attacks are seemingly part and parcel of buying into a decentralized, cryptocurrency-based market of digital goods that are frequently touted as an essential component of Web3, a popular term to describe what many hope will be a fully blockchain-based era of online activity seamless with everyday living.

For more on the role that NFTs, the metaverse and cryptocurrencies are expected to play in Web3, check out Variety Intelligence Platform’s latest data-driven special report, “Web3 Demystified,” available only to subscribers.

While some of the priciest crypto thefts occurred in 2017 amid an earlier surge in crypto, it wasn’t until the last 12 months when individual crypto heists began totaling more than $600 million. Throughout 2021, funding for NFTs exploded, with the $2.4 billion raised in the first quarter of 2022 setting yet another market high for digital assets like the BAYC apes.

BAYC items rank among the highest individual sales of NFTs, with one bundle selling for more than $26 million in 2021, but the decentralized nature of these assets makes them susceptible to theft.

OpenSea, the largest marketplace for NFTs, has seen its own system compromised, such as one scammer who in December was able to exploit a flaw in the trading platform’s system that enabled the purchase of an NFT at an older listing price resulting in the original seller only receiving $300,000 for a Bored Ape that was set at $1 million, per The New York Times.

NFTs have often been touted and promoted by celebrities, who are just as susceptible to these thefts. As the owner of a Bored Ape that he nicknamed Fred after purchasing it in 2021, “Robot Chicken” creator and actor Seth Green was in the process of developing his own series based around Fred until the asset was stolen from him in a phishing hack and promptly resold, forcing him to halt the show.

Green’s series would have been a test case of the rights-ownership allure promised by NFTs amid widespread criticism and skepticism that such assets amount to little more than cosmetic items that can be made redundant by market instability over cryptocurrencies, as was largely seen throughout May when steep sell-offs resulted in the prices of Bitcoin and many other major cryptocurrencies plunging to their lowest levels in years as crypto exchange hub Coinbase tanked as well.

Even some of the biggest names in metaverse-adjacent spaces like “Fortnite” are critical of this market and its inherent risks. Epic Games founder and CEO Tim Sweeney on Monday tweeted out to followers to beware of accounts promoting cryptocurrency for “Fortnite” before casting shame on marketplaces that he says enable such scams.

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