Posted 8 months ago | by Catoshi Nakamoto
Popular digital art or NFT (Non-Fungible Token) marketplace Open Sea, is investigating one of its executives for insider trading of NFTs hosted on the app.
Nate Chastain, the company’s head of product, was accused of buying and then flipping NFTs that were paid promotional features on the website. The Mark Cuban-owned platform confirmed the rumor that an employee had used inside information to profit from the sale of several featured NFT collections.
“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 company wrote in a statement. “This is incredibly disappointing. We want to be clear that this behavior does not represent our values as a team,” CEO and cofounder Devin Finzer wrote in a blog post on Open Sea.
Although the $1.5 billion marketplace failed to name the employee responsible for insider trading activity this follows accusations on Twitter that Nate Chastain, the company’s head of product, had used his position in the company to purchase NFTs right before they were advertised for promotion on the OpenSea landing page. According to users on Twitter, Chastain’s main wallet linked here, is linked to other “burner” wallets. Chastain is accused of using these “burner” wallets to facilitate the purchase and sale of various NFT collections before they were promoted on the website, giving him an unfair advantage to profit off the NFTs.
In a series of posts that have gone viral, Twitter user ZuwuTV traced all of Chastain’s public transactions to all of his wallets. Chinese blockchain and crypto news platform 8btc also posed on Twitter that its friend BlackBeatsChina had traced the sales which they alleged were tied to Chastain expressing that he made a collective profit of 18.875 Ether or about $67,000 at the time of this report.
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
About 8 minutes later, Wallet B buys 4 pieces from the "Dailydust Collection". One in particular for .25 ETH named "Spectrum Of A Ramenfication Theory"https://t.co/EO7bjbSxhU pic.twitter.com/AZacOYpuHi
— ricefarmer.eth 🍚 (@RiceFarmerNFT) September 15, 2021
It’s important to note that crypto since there is no regulatory clarity insider trading is not a thing unlike the traditional finance world as Ben Armstrong founder of Bitboy Crypto expressed today during the morning live stream. None the less employees of Open Sea are now forbidden from taking advantage of inside company knowledge for profit. However, the practice is still extremely unethical to abuse and is greedy as Ben said during the morning live stream.
The company is “conducting an immediate and thorough third party review of this incident,” Finzer said.
We have a strong responsibility to our community, and we take any breach of trust incredibly seriously.
We've taken additional steps to address this and are investing in policies that move the space towards greater transparency and openness.
— Devin Finzer (dfinzer.eth) (@dfinzer) September 16, 2021
As Bitboy Crypto previously reported a few months ago, Nate Chastain was the Open Sea admin that had announced that it banned PolygonPunks, a doppelganger clone project based on the widely popular CryptoPunks built on Matic’s chain. However, upon inspection of both Chastain and Dan’s wallets, they hold other clones of CryptoPunks themselves that are still being traded on the marketplace.
You can view their wallets showing the owned CryptoPunks NFT artwork here and here. There is also a double standard here as Chastain himself owns an NFT of PopPunks, another clone of CryptoPunks, according to his wallet. While Dan’s wallet also owns a different clone of CryptoPunks called Bastard Punks.
Today, Chastain appears to no longer be working for the company. His Twitter bio now includes the phrase “Past: @opensea.” Again, OpenSea has not publicly named Chastain as the involved employee in the incident. But CEO Devin Finzer said the NFT trading platform asked for and received his resignation the CEO told CoinDesk in an email. In addition, Chastain’s Linkedin page is now listed as unavailable.
Bitcoin is currently trading at [FIAT: $47,753.39] DOWN -0.8% in the last 24 hours according to Coingecko at the time of this report.