While the now-defunct FTX exchange dealt primarily with cryptocurrency, its collapse has also affected the NFT sector. More specially, those who had their NFTs stored on the exchange such as buyers of this year’s Coachella NFT passes, have found themselves unable to access their assets as the exchange has halted withdrawals.
Sadly, the situation has gotten even worse as a new account from a Solana engineer called jac0xb.sol on Twitter says that the metadata of the NFTs has been tampered with. As a result, when users click to view their NFTs, they do not see the artwork it originally came with and are redirected to a third-party site.
NFTs in Danger?
In a series of tweets from December 7, 2022, the engineer revealed that the current issue has been caused by FTX’s data storage choices.
“Oh look FTX hosted all the NFTs minted on their platform using a web2 API and now all those NFTs have broken metadata and the links go to a restructuring website,” he posted, along with a screenshot of a faulty metadata page and of bankruptcy details for FTX Trading co.
It should be noted that the US version of the FTX site now redirects to the company’s bankruptcy page. But for NFT holders, this leads to a precarious situation in which their NFTs are visible to them but the images attached to the assets are not. Since this tweet went live, several users have shared images of the NFTs in the FTX accounts which all look blank.
NFT users on FTX don’t seem to be able to catch a break; first, their NFTs are essentially stuck on the exchange with little hope of getting them back. Now, the NFTs that are on the exchange are having their metadata changed and their images gone in what can only be described as a bizarre turn of events.
Because NFTs are based on blockchains, we like to think of them as unchangeable and it might not have even occurred to many of us that this sort of change would be possible. But this is a pitfall, jac0xb.sol says, of using centralized web3 storage solutions.
“There is a lesson to be learned here yet collections are still hosting metadata on AWS,” he said, with many of the replies agreeing with him but also pointing out that it is common practice even among web3 projects.
One Twitter user called @Chopper_Dad noted that over half of all existing metadata for NFT is stored on centralized exchanges.
While this incident is unfortunate, it does shed some light on current industry practices that can be improved. First, there is the obvious due diligence that exchanges and other platforms can undergo to avoid an FTX-style collapse.
There is also the matter of NFT metadata storage. This incident might be rare but it does show that centralized metadata storage might not be adequate for the industry long-term and while FTX customers continue to hope for a recovery of their assets, can hopefully be addressed.