- An OpenSea employee, Nate Chastain, has been accused of insider trading on the platform.
- Chastain allegedly used confidential details to purchase an NFT before it was promoted on the company’s website and social media accounts.
OpenSea, the world’s largest NFT marketplace, recently uncovered evidence of insider trading. One of the company’s employees, Nate Chastain, Head of Product, has come under fire for the scandal. Chastain allegedly used confidential information to purchase NFTs before they were promoted on the homepage. He later sold them off for a profit.
Further analysis from BlockBeats suggests that Chastain has profited 19 ETH, about $65,000, from multiple cases of insider trading. The employee previously admitted to purchasing in-demand artwork by a featured artist, and was accused of the same crime.
The incident emerged on Twitter Tuesday night, with major investor Andreesen Horowitz also investigating the case. OpenSea has since published a blog post, possibly confirming the accusations and describing them as “ incredibly disappointing.”
OpenSea insider trading admission
Calling out the behavior, the company initiated a third-party review of the incident and implemented two new policies. OpenSea employees are now prohibited from trading collections or creators while they are being featured on the company’s website. The company’s staff is also prohibited from using confidential information to purchase or sell any NFTs. This applied whether the NFTs are available on OpenSea or not. Concluding, OpenSea promised to do “the right thing” to earn back trust from the community they serve.
Other than market manipulation, the company has also been admonished for its lack of transparency and its degree of centralization. OpenSea also received heavy criticism in recent weeks for its 2.5 percent trading fee, search functions, and categorizations. Last week, a bug on the platform destroyed $100,000 worth of NFTs.
Still, the platform dominates global NFT marketplaces. OpenSea recorded over 181 percent user growth and over 14,000 unique wallet addresses involved in transactions last month. Over 1.57 million transactions took place with a total volume of around $1.67 billion. Currently, the platform tops the leaderboard for the most ETH burned since EIP-1559.
However, last week, OpenSea sales volume dropped by almost 50 percent. Many now wait to see if the reputation-tarnishing incident will bear any effect on the company.
The bigger picture in the crypto industry
Nonetheless, as Wu Blockchain – a Chinese crypto news platform – notes, the incident is quite common in the crypto industry.
OpenSea admitted to insider trading. Although this is too common in the cryptocurrency industry. Coinbase has just been questioned by many people.
In 2017, Bitcoin users accused Coinbase of insider trading before the exchange launched new support services for Bitcoin Cash (BCH). TechCrunch reported that BCH had hit $8,500 on Coinbase, almost three times the price on all other exchanges.
A year later, the same concerns arose over Litecoin (LTC). Shortly after, the San-Francisco-based firm was hit by a class-action lawsuit for BCH insider trading. This was followed by Coinbase’s management and PIPE investors dumping billions worth of shares to retail investors.