Los Angeles Times
Insider trading of NFTs is alleged
Operator of market for nonfungible tokens says an employee has resigned amid scandal.
OpenSea said an employee resigned after the operator of the largest marketplace for nonfungible tokens learned that the person purchased items that they knew would be featured on the front page of the platform before the NFTs were displayed for sale.
Twitter users this week flagged questionable transactional activity involving Nate Chastain, head of product at OpenSea, to the company. Chastain didn’t respond to a request from Bloomberg News for comment. OpenSea didn’t release the name of the employee who resigned. A Twitter account attributed to Chastain says “Past: @OpenSea.”
A third-party review of the alleged conduct is ongoing, the company said in a blog post Thursday. The former worker was asked to resign after OpenSea learned of the purchases Wednesday, the company said. Employees are now prohibited from buying and selling from collections or creators that are being featured or promoted. The company also said it’s preventing team members from using confidential information to purchase or sell any NFTs.
OpenSea facilitated more than $1 billion in sales of NFTs in August, when daily sales of the digital art and other nonfungible items connected to digital ledgers hit an all-time high, according to the tracker NonFungible.
Investors and speculators are buying a wide variety of pictures, including digital apes and penguins. Prices of NFTs can fluctuate wildly in a matter of hours and sometimes minutes. Being featured on OpenSea’s front page probably means higher demand for the featured item.
In a July funding round, OpenSea raised $100 million from investors including Andreessen Horowitz. That valued the marketplace at $1.5 billion.