OpenSea confirms one of its employees took part in NFT insider trading scheme
Stock insider trading has been going on for decades. Now the same illegal practice is now moving its way to the NFT world. Earlier today, an executive at the NFT platform OpenSea used insider knowledge to buy NFT assets in advance, the $1.5 billion tech startup admits today.
OpenSea confirmed that one of the employees at the company used insider knowledge to purchase NFTs prior to them being featured on the digital marketplace. OpenSea said it has implemented policies to prevent its employees from buying or selling from collections or creators while we are featuring or promoting them on its home page.
“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 behavior 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,” OpenSea said in a blog post.
While OpenSea did not identify the employee by name, on Tuesday, OpenSea’s head of product, Nate Chastain, was accused by Twitter user @ZuwuTV of using secret crypto wallets to front-run sales on the platform.
In a Twitter post, Zuwu Said, “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?”
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?
— Zuwu🟩 👻🎃🦇 (@ZuwuTV) September 14, 2021
A Chinese blockchain and crypto news platform 8btc also traced the sales allegedly tied to Chastain and his front-running scheme, noting that a collective profit of 18.875 ether, or about $67,000 at today’s price.
— 8BTCnews (@btcinchina) September 15, 2021
Meanwhile, OpenSea also added that its team members are also prohibited from using confidential information to purchase or sell any NFTs, whether available on the OpenSea platform or not.
“For a new, more open internet that empowers creators and collectors, we will need to bake in trust and transparency into all that we do. We’re committed to doing the right thing for our users and earning back the trust of the community we serve,” the company added.