An OpenSea employee bought NFTs before they were promoted on the marketplace’s homepage, which angered traders have been quick to condemn and call out as insider trading.
Chastain bought highly-valued collectibles before they were prominently displayed on the market’s homepage, selling for inflated prices before keeping the profits in his personal wallet.
Insider trading – where individuals use non-public knowledge about a company for financial advantage – is illegal in most regulated markets.
But the NFT market does not have such restrictions.
OpenSea – the largest NFT trading platform in the world – has published a blog post that appears to confirm the accusations, describing the events as “incredibly disappointing.”
Chastain’s shady practice was uncovered earlier this week when Twitter user ‘Zuwu’, wrote: “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’ included links to blockchain records that backed up the accusation.
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In a blog post on Wednesday, OpenSea confirmed that an employee had indeed used insider knowledge to purchase NFTs before they were featured on the homepage.
“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,” the post stated.
“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 review of this incident so that we have a full understanding of the facts and additional steps we need to take.”
“We’re conducting a thorough review of yesterday’s incident and are committed to doing the right thing for OpenSea users,” OpenSea CEO Devin Finzer said in a tweet.
Non-Fungible Tokens are bought using cryptocurrency, most commonly Ethereum (ETH), and stored on a permanent digital ledger called the blockchain, where every transaction is logged and made publicly available.
Some of the most expensive NFT’s ever sold have fetched eye-watering amounts as investments in digital collection proliferate despite the concept being inherently controversial.