The largest NFT marketplace said it was 'disappointed' employee was trading using insider information
- OpenSea has issued a statement after its head of product was accused of insider trading.
- The CEO of the leading platform for NFT trading wrote "this is incredibly disappointing."
- Items featured on OpenSea were allegedly being traded by the employee and flipped for profit.
- For more stories go to www.BusinessInsider.co.za.
OpenSea, the leading platform for trading NFTs, issued a statement on Wednesday after its head of product, Nate Chastain, was accused of insider trading by social media users.
The company, valued at around R25 billion after it raised R1.4 billion in Series B venture capital funding, did not specify which employee it was referring to or what was traded in its statement. Insider trading involves a member of a company using private knowledge to gain an upper hand, usually with regards to stocks or assets.
NFTs, or non-fungible tokens, are pieces of data stored on the blockchain. They can be sounds, pictures, or art which can be bought and stored on virtual wallets with unique identifiers. Over the course of the past two years, NFT hype has ballooned with some being sold for millions of dollars. Opensea is a marketplace for NFTs, where users can buy and sell these virtual items for the cryptocurrency Ethereum.
On Tuesday evening, a Twitter user going by Zuwu said Chastain had "a few secret wallets" that purchased items that appeared on the front page of OpenSea, only to sell them a short time later.
As was noted by the Verge, OpenSea's terms of service prohibit "manipulative trading activities."
The user claimed they found Chastain's wallet, which is publicly available on the blockchain. Insider was unable to confirm if the wallet was Chastain's. The wallet mentioned does exist and has been viewed by Insider - it purchased and sold the NFTs in question.
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
The tweet was shared thousands of times.
On Wednesday, CEO and co-founder of OpenSea Devin Finzer issued a statement on their blog seemingly addressing the situation. "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," he wrote. "This is incredibly disappointing."
In the blog post, Finzer announced the implementation of new rules for OpenSea "team members" - they can no longer "buy or sell from collections or creators" while the site is promoting them and they "are prohibited from using confidential information to purchase or sell any NFTs."
According to the Verge, over 1,700 people filed into a Tuesday night live discussion on Twitter Spaces to discuss the development and what repercussions it might have.
Chastain has not made a public statement about the accusation and did not immediately respond to Insider's request for comment. OpenSea did not respond to a request for comment.
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