You would hope that insider NFT trading is not a thing but, apparently, it is.
OpenSea, an online crypto marketplace that has been dubbed the “eBay of NFTs,” has admitted that one of its top executives has been buying and selling the digital collectibles using insider information from its site.
Of the forums that allow you to buy and sell said crypto-art, OpenSea is one of the most prominent, hosting billions of dollars worth of non-fungibles transactions on its platform on any given month. The company, which recently raised tens of millions of dollars to expand its platform, regularly features certain collections and creators on its homepage, allowing visitors to view and purchase them.
However, the platform’s head of product, Nate Chastain, has apparently been making investments in many of these collectibles prior to their public release.
Chastain’s activity was initially commented on by anonymous Twitter users on Monday. One particular user, @ZuwuTV, claimed that the exec had been using a number of “secret” crypto wallets to purchase NFTs from collections and artists prior to their release. After the NFTs premiered and their prices shot up, Chastain would sell them off to make a profit, Zuwu claimed:
Hey @opensea why does it appear @natechastain has a few secret wallets that appears to buy your front page drops before they are listed, then sells them shortly after the front-page-hype spike for profits, and then tumbles them back to his main wallet with his punk on it?
— 0xZuwu.eth 🧪 (@0xZuwu) September 14, 2021
Chinese cryptocurrency news platform 8BTC also claims to have analysed the wallet activity allegedly connected to Chastain and says that he netted the equivalent of some $US67,000 ($91,489) in Ether coin (ETH).
After a brief online furor, OpenSea responded to users complaints with a blog post, published Wednesday, that promised changes. The post does not openly identify Chastain as the person involved in the dealings. Instead, it says:
“Yesterday we learned that one of our employees purchased items that they knew were set to display on our front page before they appeared there publicly. This is incredibly disappointing. We want to be clear that this behaviour does not represent our values as a team. We are taking this very seriously and are conducting an immediate and thorough review of this incident so that we have a full understanding of the facts and additional steps we need to take.”
The company further stated that it had instituted new rules that forbid OpenSea team members from buying or selling specific NFT products while the company is promoting them, or from “using confidential information” to buy and sell them.
In my own humble opinion, NFTs are already such an exorbitant waste of time and money (often derided as digital Beanie Babies for hapless rich people) that a development like this doesn’t seem all that surprising. The relatively regulation-less sphere of crypto ensures that behaviour that would be illegal in other industries is, in NFT-land, just a shitty, albeit lawful, price of doing business.