OpenSea Froze The Crypto Rapper’s NFTs. The Owner Wants A Refund.

Twitter user Ethmuppet said they scored “a piece of crypto history” when they purchased two NFTs from Heather Morgan, the eccentric entrepreneur arrested alongside her husband on Tuesday for attempting to launder $4.5 billion in looted cryptocurrency. But hours later, the NFTs were gone. They had suddenly disappeared from OpenSea, the NFT marketplace where Ethmuppet paid roughly $600 to own images made by Morgan’s rap persona, Razzlekhan.

Ethmuppet told BuzzFeed News that OpenSea hasn’t refunded their money and said they feel “rugged” by the $13 billion company. They believe they could have sold the NFTs at an enormous profit — Razzlekhan’s brand has since ascended from failed criminal mastermind to unlikely antihero — and had even listed one of the images at $100,000 before it was taken down.

“I purchased something legally and fairly within the terms of their platform and contract,” Ethmuppet said via Twitter DM. “They then decided to censor the person that minted it for sale, and have made my purchase worthless.”

Over the course of a week, OpenSea has become an unwitting character in an investigation the Department of Justice called its “largest financial seize ever.” Tuesday morning, the DOJ revealed that Morgan and her partner, Ilya Lichtenstein, may have laundered hot crypto through NFT purchases. Their OpenSea accounts went down hours later, BuzzFeed News reported.

The chain of events has raised a volley of questions. Is OpenSea being investigated? Has the DOJ seized Morgan’s NFTs as evidence? Could stricter regulation of crypto markets stop future NFT laundering? And did OpenSea have the right to moderate its platform and, by extension, the supposedly immutable blockchain?

OpenSea did not respond to numerous requests by BuzzFeed News to answer some of these questions. But the company told Motherboard in a statement that it enforces its guidelines “in various ways, including delisting and in some instances, banning accounts — as was the case in this instance, out of an abundance of caution.” Motherboard reported that both NFTs purchased by Ethmuppet are viewable on the platform, but trading is frozen and their associated images are still missing.

A DOJ spokesperson declined to comment on the matter.

OpenSea’s involvement in this incident is largely unprecedented. Only a few instances of NFT money laundering are known. A report by blockchain analyst Chainalysis looked at recent activity across NFT platforms and determined that laundering was a “small but visible” component of NFT transactions. According to Chainalysis, funds moved through NFT marketplaces by “scam-associated addresses” peaked in late 2021.

The Treasury Department also flagged NFT platforms as potential money laundering hubs. In a study released this month, the agency warned that NFT markets may eventually be forced to comply with anti–money laundering measures under the Bank Secrecy Act. These requirements, called…