EtherFi, a liquid staking protocol, has published an open letter criticizing OpenSea. Last week, the company’s EtherFan collection of NFTs backed by staked ETH was abruptly removed from the NFT marketplace. The two had been working together on the EtherFan debut for weeks to release the collection, with an advertising plan based on cross-promotion and sales on the secondary market.
Mike Silagadze, the founder of EtherFi, mentioned in the letter that OpenSea appeared positive and interested in the partnership and was excited to host them. However, the team members did not give EtherFi hints that they would terminate their co-working efforts.
EtherFi calls marketplace ‘unlicensed casino’
EtherFi had its first mint of EtherFan last Tuesday, releasing 1,000 NFTs on OpenSea. However, within 24 hours, the team was shocked to discover that their listings had disappeared from the marketplace without clarification or notice.
Silagadze noted that the team even attempted to relist their NFTs but was met with an error code. In the open letter, the project said that OpenSea had been running a de facto unlicensed casino whereby people participated in “gambling” and spent millions on “monkey” pictures. Yet, it continued, listing a collection with actual utility is disallowed since it has utility.
The letter acknowledged that it believes OpenSea wasn’t necessarily being malicious or anyone intentionally doing something wrong, highlighting that the company has many teams and other teams might have no idea what other teams were doing.
Silagadze highlighted that EtherFan’s listing on a marketplace was an important part of its marketing since it foresaw a resale market. He also said that they did not get any indication that they had somehow violated the Terms of their Service.
However, he acknowledged that his team did not directly inquire since they felt it was okay because, in their opinion, the token is not a security; it is just staked ETH. Silagadze also pointed out that other governmental bodies, such as the Ontario Securities Commission and the Canada Revenue Agency, have said explicitly that ETH staking is not a security.
The team received “radio silence” from OpenSea for about a week after the company stopped providing trade help, despite verbal pledges and the development of a telegram group promising a cross-promotional marketing effort, according to Silagadze.
OpenSea says it was enforcing its terms of service
OpenSea finally broke its silence on July 13 with what Silagadze called “a templated response.” The NFT marketplace noted that while they do not offer specific details on enforcement actions, their terms of service govern the content and behavior allowed on the platform. Furthermore, it said its enforcement actions include delisting and sometimes banning accounts.
Meanwhile, EtherFan is now trading on Rarible since it supports ERC1155 tokens, the standard the collection employs.
In February this year, Open Sea delisted another NFT collection. The Rihanna red-hot Super Bowl performance song collection’s secondary sales were halted after selling out and generating $63,000 in revenue. The web3 music platform AnotherBlock distributed 0.99% of the song’s total revenues to 300 Ethereum NFTs.
The AnotherBlock team said that without informing them, OpenSea’s automatic system “flagged” the project’s description and pulled it down. According to Andreas “bigleton” Bigert, Head of Community & Growth at AnotherBlock, the collection’s sales were suspended on the marketplace because OpenSea prohibits NFTs that appear to be promising fractional ownership and future profit based on that ownership. Bigert also alleged that AnotherBlock’s efforts to fix the problem had been “ignored” by OpenSea.
