NFT marketplace admits employee used insider information to buy collectibles
Posted in: Today's ChiliOne of the largest marketplaces for trading NFTs has found itself embroiled in controversy. In a blog post spotted by The Block, OpenSea admitted on Wednesday that one of its employees, Nate Chastain, had purchased NFTs he knew the company had planned to feature predominantly on its platform.
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 admission came after a Twitter user named Zuwu accused Chastain this week of using secret Ethereum wallets to buy front-page NFT drops before they were available for the public to purchase, and then later selling them at a profit following the inevitable spike in interest.
OpenSea called the incident “incredibly disappointing,” and said it’s investigating what happened. “We want to be clear that this behavior does not represent our values as a team,” the company stated. “We are taking this very seriously and are conducting an immediate and thorough review of this incident so that we have a full understanding of the facts and additional steps we need to take.”
I just wanted to secure one of these before they all disappeared tbh
— Nate Chastain (natec.eth) (@natechastain) August 3, 2021
The company notes it has already implemented two new policies to prevent incidents like this from happening in the future. Moving forward, OpenSea employees aren’t allowed to buy or sell from collections and creators while they’re being promoted. They’re also prohibited from using confidential information to buy and sell NFTs on OpenSea and elsewhere.
Understandably, the incident has caused quite a stir among the company’s customers, with some likening Chastain’s behavior to insider trading. More than anything, the episode highlights just how much of a wild west the NFT market is at the moment. According to an analysis by business law firm McMillan, there are currently no laws in either the US or Canada that regulate the sales of NFTs. This incident may push the Securities and Exchange Commission to change that.
