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Chris Chapman owned one of the crypto world’s most valuable possessions: a unique digital image of a spiky-haired monkey in a spacesuit.

Mr Chapman bought immutable token Last year, a widely overrated series of digital collectibles called the Bored Ape Yacht Club became a phenomenon. In December, it launched its Bored Ape on OpenSea, its largest NFT marketplace, priced at approximately $1 million. Two months later, as he prepared to take his daughters to the zoo, OpenSea sent him a notification: The monkey had been sold for roughly $300,000.

Mr Chapman, who runs a construction business in Texas, said a crypto scammer exploited a flaw in OpenSea’s system to buy the monkey for far less than it’s worth. Last month, OpenSea offered him about $30,000 in compensation, but said he turned it down in hopes of negotiating a larger payment.

Mr Chapman, 35, said the company “made a lot of stupid, stupid mistakes”. “They really don’t know what they’re doing.”

Mr. Chapman is one of many crypto enthusiasts asking about OpenSea, an eBay-like site where people can browse millions of NFTs, buy images, and put their own for sale. In the last 18 months, OpenSea has become the dominant NFT market and one of the most high-profile crypto startups. The company has raised more than $400 million from investors. amazing $13.3 billion and executives from tech giants like Meta and were hired. Lyft.

But as OpenSea has grown, it has struggled to prevent theft and fraud. The glitch that cost Mr Chapman’s monkey led to months of mutual accusations and forced the start-up to pay more than $6 million to NFT traders.

Customers also complain that OpenSea is slow to block the sale of NFTs seized by hackers, who can make a quick profit by reversing stolen goods. And the art of plagiarism proliferated on the site, angering artists who once saw NFTs as a financial lifeline. The company is facing at least four lawsuits from traders and one of its former executives accused Fees for insider trading involving NFTs this month.

OpenSea’s problems are compounded as demand for NFTs cools amid a crash in cryptocurrency prices. NFT sales dropped nearly 90 percent Since September, NonFungible, according to industry data tracker. OpenSea is also competing with competition From newer marketplaces set up by established crypto companies like Coinbase.

The company’s conflicts with users illustrate some of the company’s core tensions. web3is a utopian vision of a more democratic internet controlled by ordinary people rather than giant tech companies. Like many crypto platforms, OpenSea does not collect the names of most of its customers and does not consider itself a “self service” It is the gateway to a loosely regulated market. But users want the company to act more and more like a traditional business by compensating fraud victims and eliminating theft.

In three interviews, OpenSea executives acknowledged the extent of the problems and said the company is taking steps to increase trust and security. Headquartered in New York, OpenSea has hired more customer service personnel to respond to all complaints within 24 hours. The company is freezing stolen NFT listings and has a new scanning process to prevent plagiarized content from circulating on the platform.

“Like any tech company, there is a period when you catch up,” said Devin Finzer, 31, CEO of OpenSea. “You try to do everything you can to welcome brand new users to the venue.”

OpenSea was founded four and a half years ago by Mr Finzer, a Brown University graduate, and Alex Atallah, a former engineer in software, whose previous venture, a personal finance application, was sold to financial technology company Credit Karma. firm Palantir. they are now among the richest crypto billionaires in the worldAccording to Forbes.

Their business model is simple. OpenSea receives a 2.5 percent discount every time an NFT is sold on its platform. Over the past year, business has soared as NFTs became a cultural sensation and the value of Bitcoin and other cryptocurrencies skyrocketed.

Almost overnight, OpenSea has grown from an obscure startup to one of the most powerful brokers in the crypto industry, which soon caused problems.

“It would be difficult for any company to turn around and afford that kind of increase so quickly,” said Carrie Presley, who worked for OpenSea for several months last year. “It was very chaotic.”

Since OpenSea charges a fee for every NFT sale, some users claim that the company has a financial incentive not to restrict the sale of stolen goods. This year, Robert Armijo, an investor in Nevada, sued OpenSea for failing to prevent a hacker who had stolen several of their NFTs from selling one of them on the platform. (OpenSea’s lawyers called the complaint “non-initial” and said the company took immediate action to prevent other stolen NFTs from being sold.)

In February, Eli Shapira, a former technology executive, clicked on a link he said gave a hacker access to the digital wallet where he stored his NFTs. The thief has sold two of Mr. Shapira’s most valuable NFTs on OpenSea for a total of more than $100,000.

Within hours, Mr. Shapira contacted OpenSea to report the hack. But the company never took action,” he said. It has since used publicly available data to track the account that had their NFT confiscated, and saw the hacker sell other images on OpenSea, possibly for further theft.

“It’s very easy for these hackers to go out there and open an account and immediately trade or sell anything they steal,” said Mr. Shapira. “All these guys need to step up security.”

Last month, after the New York Times asked OpenSea about the lawsuit, the company responded to Mr. Shapira and froze future sales of stolen NFTs.

Anne Fauvre-Willis, who oversees OpenSea’s customer support efforts, said the company is working to improve response times when users report theft.

“It’s important to speed up,” he said. “This is something we invest in today and will continue to invest heavily in going forward.”

OpenSea has also seen a wave of plagiarism as vendors convert traditional artworks into NFTs and then list images for sale without compensating the original creator.

DeviantArt, an artist collective owned by web development firm Wix, runs software that scans millions of NFTs every day to detect images stolen from their artists’ work. The program has detected more than 290,000 cases of plagiarism on OpenSea and other NFT marketplaces.

“There’s almost no liability of any kind,” said Liat Karpel Gurwicz, DeviantArt’s chief marketing officer.

OpenSea offers a tool that allows people to create NFTs in a few clicks and transforms regular images into unique items whose authenticity is saved in a public ledger called the blockchain. In January, the company said it would limit the number of NFTs users can do with the tool. However, after the backlash from NFT fans, OpenSea reversed Sure, and in a tweet he said he’d cut the line off, even though many of the new creations turned out to be “plagiarized artifacts, fake collectibles, and spam.”

“They bastardized the concept of what NFTs should be,” said Aja Trier, a Texas artist whose work has been copied and sold on OpenSea. “It dilutes the market for my business.”

In May, OpenSea announced that it is using image recognition technology to prevent plagiarism. However, the scanning service only compares newly uploaded images with other NFTs listed on OpenSea, making it unlikely to detect stolen artwork from other websites.

Shiva Rajaraman, former vice president of Meta and Spotify, who works on OpenSea’s product team, said the company hopes to expand its anti-plagiarism dragnet. “We will be working on partnerships with other people to get this original work,” he said.

Mr. Chapman, a former college basketball player, started experimenting with crypto last year. He bought a Bored Ape for a few hundred dollars and later traded it for an ape in astronaut gear, as it evoked the space age history of his hometown of Houston. He started wearing a Bored Ape sweatshirt and his mother-in-law bought him a monkey brand water bottle.

In September, Mr. Chapman listed the space monkey on OpenSea, setting the price at 90 Ether. Three months later, it raised the price to 269 Ether, or about $1.1 million, in line with the rapidly rising value of other Bored Ape NFTs. He planned to sell the NFT immediately until he could buy another, less valuable space monkey and pocket any profits from the trade.

In February, the monkey was sold on the original listing for 90 Ether, or roughly $300,000. Knowledgeable traders had exploited a glitch in OpenSea that allowed them to activate outdated sales listings.

On February 18, Mr. Finzer announced OpenSea has updated its technology to prevent thieves from re-enabling old listings. Company repaid some victims asked them to sign confidentiality agreements in exchange for payments.

Mr Chapman said OpenSea initially offered him a refund of the 2.5 percent fee he received when the space monkey was sold. Last month, OpenSea’s lawyer said after writing to the company that it increased its offer to 15 Ether, or just under $30,000 at today’s prices. OpenSea declined to comment on its case.

Mr. Chapman is looking forward to a bigger payback. As the owner of Bored Ape NFT, he would own a large stake in ApeCoin, a cryptocurrency launched in March. Each of the Ape NFT holders received over $100,000 at the time.

Having lost his monkey, Mr. Chapman missed out on unexpected ApeCoin earnings, which he planned to use to buy a house outside of downtown Houston near his wife’s family.

“I can own ApeCoin right now and get a down payment on my house,” he said. “They’re all gone.”