This morning OpenSea verified that an employee has utilized information inside to take advantage of the sale of NFT collections on the Site. Nate Chastain, the head of product, has been accused of using burner wallets to peddle them.
The $1.5 billion+ OpenSea, the primary secondary market for NFT collectibles, has announced that one of its executives benefited from the sale of NFTs, or non-fungible tokens, that were on the main page of the platform, a kind of insider trading.
Insider Trading at OpenSea?
After anonymous allegations on Twitter, OpenSea, a marketplace for NFTs, revealed its new director of product, who had allegedly used his position to buy NFTs from lesser-known collections, and advertise them on the main landing page of the website just before they were announced.
The blog post by OpenSea stated:
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 third party review of this incident so that we have a full understanding of the facts and additional steps we need to take. We have also implemented the following policies:
- OpenSea team members may not buy or sell from collections or creators while we are featuring or promoting them (e.g. on our home page); and
- OpenSea team members are 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.
Transactions Discovered by Twitter
The comments were in response to a local inquiry of Chastain’s deals. ZuwuTV, a Twitter user, started a thread stating that Chastain was running hidden wallets that bought Featured NFTs from The Game Items’ main page before they were listed. They also said that Chastain sold these items later after their value had risen due to publicity. In the forum post, ZuwuTV discovered a transaction from Chastain’s known wallet to an anonymous wallet that transferred 5 Ethereum (approximately $17,000 USD) to a third account.
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
Afterward, the NFTs were allegedly sold at a profit of around 2 ETH, and the funds were sent back to Chastain’s original wallet. OpenSea has not yet acknowledged which NFTs were exchanged using its own internal data.