Opensea Feels The Heat After Admitting Employee ‘Insider Trading’ On NFTs
Opensea- a popular peer-to-peer NFTs and collectables marketplace- is feeling the heat after admitting to employee ‘insider trading’. It has recently been found that an employee abused their position to front-run the purchase of NFTs before they were promoted on the website’s homepage. Traders have since accused the marketplace of allowing an ‘insider trader’.
However, there are currently no specific NFT legislations around such practices which means that Opensea and the employee in question have technically done nothing wrong. However, this view stems from a legal standpoint and many traders feel that both the marketplace and the trader should be punished for their actions, which were wrong from a moral perspective.
Worries about the goings-on with NFTs on Opensea started on Tuesday when a Twitter user, ZuwuTV, posted about the peculiar buying habits of opensea’s head of product, Nate Chastain. ZuwuTV said that it seemed as though Chastain was buying NFTs before they were listed on the front page. When these NFTs eventually landed on the front page, demand surged which pushed the price higher, resulting in increased sales and funds flowing into his wallet.
The original tweet read, “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?”
ZuwuTV made no comment on the number of times that he had suspected this behaviour and he also did not give an approximation of Chastain’s revenue proceeds from doing this. However, the investigation following the allegations was extensive, including a wallet analysis, a Wayback machine and following trails from wallet to wallet. ZuwuTV also encouraged others to look into the suspicious buying habits and pick up on any points that may have been missed in his investigation.
Opensea soon responded to the allegations with a blog post. The post was written by CEO, Devin Finzer, and admitted the allegations however, Opensea made sure to point out that the practices displayed by Chastain do not reflect the marketplace’s values as a whole.
The post stated, “This is incredibly disappointing. We want to be clear that this behavior does not represent our values as a team.”
Finzer also announced that the company had opened a third-party review which would establish exactly what had happened and gather a full understanding of the situation and circumstances. Until this review is complete, the company has brought in additional staff policies to prevent repeats of this behaviour. Opensea now wishes to win back the trust of its users.