OpenSea, An NFT Startup Valued At $1.5 Billion, Admits “Insider Trading”
OpenSea is one of Silicon Valley’s newest goldilocks firms. The NFT trading marketplace was recently valued at $1.5 billion by Wall Street firms, not bad for a brand new organization run by only a few people dealing in Non-fungible-tokens that anyone can make from their computer.
Their success looked to make them all billionaires in the short run, until a Twitter user named Zuwu TV posted the following statement earlier this week:
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?
Front running NFT purchases
Translation for those not in the know: The Head of Product of the company, a man called Nate Chastain, would buy an NFT for himself just before OpenSea, the world’s biggest NFT trading platform, would then feature the piece on the front page of its website.
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.eth 👻🎃🦇 (@ZuwuTV) September 14, 2021
You can guess what happened next given the FOMO in today’s NFT marketplace. The price of the piece of art would jump following the buzz of its main page listing and Nate would net a hefty profit.
Given that crypto analytics firm recently estimated Open Sea’s monthly volume of trading at around $3.4 billion, we guess Nate made some decent money from this front running insider trading scheme and can thus afford a good lawyer.
According to OpenSea, in the past 24h, NFT transaction volume has recovered, CryptoPunks increasing by 684.7%, Art Blocks 49.52%, BAYC 183.29%, and Loot 84.59%. pic.twitter.com/85jkcBFa5a— Wu Blockchain (@WuBlockchain) September 16, 2021
OpenSea meanwhile saw its value (and sales of NFTs) drop quite a bit. In order to stop the bleeding, the firm admitted, in good marketing terms that they:
Learned that one of our employees purchased items that they knew were set to display on our front page before they appeared there publicly.
We’re conducting a thorough review of yesterday’s incident and are committed to doing the right thing for OpenSea users.— Devin Finzer (dfinzer.eth) (@dfinzer) September 15, 2021
We have posted an official statement here: https://t.co/NWExSdThOf
By this morning, Nate’s Twitter bio mentions that his past career was at OpenSea. Guess we’ll learn soon enough whether he was fired or left.
NFT company, not ready for Wall Street just yet apparently.