The U.S. government put 57 cryptocurrency addresses and one exchange on the OFAC sanctions list on Monday for facilitating ransomware and money laundering. As it turns out, one of those addresses controls a bunch of NFTs that were still viewable on a popular digital marketplace as of Wednesday morning.
Blockchain infosec company Elliptic pointed this out in a blog on Tuesday, noting that the total amount of cryptocurrency in the sanctioned addresses amounts to more than $300 million. The sanction designation chiefly concerns a Latvia-based exchange Chatex, which the Treasury Department says facilitated transactions related to “illicit or high-risk activities such as darknet markets, high-risk exchanges and ransomware." It's the second time the U.S. government has sanctioned an exchange, and the eighth time it has sanctioned crypto addresses, Elliptic notes.
The NFTs are owned by someone who uses the pseudonym "weery," and their profile on the New York-based NFT marketplace OpenSea shows they own 42 NFTs. Elliptic notes that weery bought an alien fox-looking NFT representing a redeemable emote from the ostensibly in-development blockchain game Illuvium for around $3,300 half an hour after the address was put on the sanctions list, and 5 days ago bought a 3D ape NFT from an unverified collection for around $50,000. At the time of writing, Weery was currently trying to sell that ape for 98 ETH, or nearly half a million dollars.
This is a bit of an issue, because now that the weery's address is on the sanctioned list, nobody in the U.S. is legally allowed to conduct any sort of business with it. OpenSea, as a U.S.-based company, isn't allowed to facilitate that transaction either, even if the buyer is based outside the U.S. OpenSea does have the ability to flag accounts and NFTs on the site and block their sale, as it did when one NFT investor had their apes stolen by scammers and broadcasted their story to the entire internet.
After Motherboard reached OpenSea for comment, the bid button on the ape listed for 98 ETH was disabled, and weery’s profile page now 404s on OpenSea. According to OpenSea, it doesn’t know the exact time the sanctions list was updated but relies on notices from vendors who monitor sanctions, adding that no bids were completed on that ape NFT since weery’s address was sanctioned.
“We automatically block addresses on the U.S. sanctions list from buying, selling, or transferring on OpenSea,” a spokesperson said in an emailed statement. “Nobody was able to transact with these NFTs once the addresses were added to the sanctions list. As an additional measure, the items and accounts are no longer visible on OpenSea."
If you've got the right-clicker mindset, though, you can go ahead and save those sanctioned ape NFTs on your device.
Update: This post has been updated with the latest developments and comment from OpenSea.