An OpenSea executive has been outed for hyping nonfungible tokens he purchased and then featuring them on the homepage of the popular NFT marketplace — a move that presumably allowed him to sell the art pieces for a quick profit.
Nate Chastain, who serves as OpenSea’s head of product, allegedly used burner wallets to purchase NFTs, which were then featured on the front page of OpenSea — where they’d receive the most attention — before unloading them. A Reddit user documented the whole ordeal by publishing the transaction details.
One of the NFTs in question belongs to the Dailydust Collection on OpenSea. The “Spectrum Of A Ramenfication Theory” was purchased by Chastain on Tuesday for 0.25 Ether (ETH) before it was sold for 1.5 ETH a few hours later. Notably, the sale was executed after the NFT was featured on the front page.
A Twitter thread that appeared on Tuesday also alleged that Chastain has been flipping front-page NFTs for a while.
Found a place to upload the files that has a 30day or 250 download limit! These 2 files were sent to me anonymously with sketchy wallet activity from people looking into it before me.https://t.co/fQQqt7sjdb— ZuwuTV.eth 👻🎃🦇 (@ZuwuTV) September 15, 2021
Chinese crypto outlet 8BTC News claims that the OpenSea executive earned 18.875 ETH through insider trading of 11 NFTs.
How much #opensea product lead earned through insider trading. Data collected by our friend @BlockBeatsChina https://t.co/lJYOdQ8t0I pic.twitter.com/UQpRfj1LjR— 8BTCnews (@btcinchina) September 15, 2021
OpenSea confirmed the allegations in a blog post that appeared on Wednesday. “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 read, adding:
“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.”
OpenSea, which processed $4 billion in sales in August alone, said employees are barred from buying and selling collections that are being featured on the platform. They are also prohibited from using confidential information about NFTs to profit from their sale.
At the time of writing, OpenSea didn’t disclose the status of Chastain’s employment with the company
Polygon to offer passive income generating NFTs, boosting MATIC utility
- Ethereum-based whitelisted NFT collections receive 50% to 250% APR through yield farming rewards.
- Protocols that add a utility layer to NFTs have become increasingly popular with the high floor price of BAYC, CryptoPunks and so on.
- Unreasonably high gas fees pose a challenge on the Ethereum network.
- Analysts expect MATIC, Polygon’s native token, to break out based on recent price trends and utility boost.
The latest trend in cryptocurrencies is earning passive income from NFTs. The floor price of top NFT collections on the Ethereum network, such as Bored Ape Yacht Club and CyberKongz, remains relatively high, making it inaccessible to retail traders.
NFTs become accessible for retail traders through sharding and yield farming incentives
The Ethereum ecosystem is plagued by high gas fees, making it inaccessible for retail traders looking to turn a quick profit by flipping ETH-based NFTs. Several projects solve this problem by offering yield farming incentives on NFTs or enabling fractionalized NFT ownership.
A collective of DeFi influencers, PleasrDAO, popularized the concept of fractional ownership of NFTs. PleasrDAO split the DOGE meme into 17 billion pieces of ERC-20 tokens (DOGE tokens), and an initial 20% of the supply was auctioned.
Projects like Shoefy that add a utility layer on top of NFTs make them ideal for earning passive income through the DeFi toolset of staking, farming and income generation through liquidity pools.
Polygon Studios, the gaming and development arm of Polygon, has partnered with Unicly (UNIC), a protocol that combines, fractionalizes and facilitates NFT trading. The Unicly partnership is focused on helping traders create a revenue stream with their digital art and collectibles.
Currently, Ethereum-based NFT collections offer nearly 50%-250% APR through yield farming rewards. Through Unicly, NFT projects built on Polygon will also be eligible for whitelisting and will receive incentives through UNIC rewards.
The Polygon blockchain powers Unicly’s platform. Iit provides solutions to Ethereum’s gas fee problem and further pushes NFTs on the path of decentralization. This is likely to boost the utility of the network, driving on-chain activity higher.
Analysts at Crypto Maximalist, a YouTube channel that shares cryptocurrency price prediction and analysis, believe that after three recent fakeouts, MATIC is underperforming. The altcoin is likely to roll over like other cryptocurrencies with large market capitalizations such as Polkadot, Chainlink, VeChain and Cardano.
The analyst states that
Once Bitcoin starts to level off, money is going to start to rotate back into altcoins, and Polygon is really gearing up for a big move considering how much it has just been consolidating.
This NFT Collection By This 12-Year Old Generates $5 Million In Record Time
The non-fungible tokens (NFT) space has been attracting a large part of the global developers’ community and even 12-year-old kids are joining the rush. Once such 12-year-old Benyamin Ahmed coder recently joined the developers’ team of Boring Banas Co. to create an NFT collection dubbed Non-fungible Heroes (NFH).
This entire collection featuring 8,888 comic book-esque characters sold out in just 12 minutes for a record $5 million, as per the data on Dune Analytics. The NFT collection for NFH features heroes, villains, and gods, with their own storylines.
“It was a crazy adrenaline rush. You really never know how popular your product is until you let the public at it,” Ahmed told CNBC.
Artists from Disney, Marvel and Nickelodeon created these characters, and they are now also part of the Non-fungible Heroes Team (NFH). Ahmed’s partnership with Boring Banas comes after tasting early success with NFTs through his two NFT projects that earned him $400,000 in just two months. One of the projects was the Weird Whales. Ahmed said:
“The Weird Whales community has taught me a lot about what works and doesn’t work, and so I brought the experiences I had there with me.”
Leveraging NFTs for Media and Entertainment Industry
For his contribution to the Non-Fungible Heroes (NFH) NFT Collection, Ahmed received a percentage of the sale but didn’t disclose the amount. Ahmed worked as a developer on the team with his role focused on technical support.
Besides, he also contributed to creating the project’s web applications and smart contracts through the guidance of his father, who’s also a web developer. Ahmed said that this wasn’t a “quick cash grab” for him. He added:
“We’re building something that we believe is going to have the potential to disrupt the entire media and entertainment industry. “It is a crowdsourced, real-time, incredible example of how the power of Web3.0 can impact the media and entertainment industry”.
The overall goal of the NFH project is to become “the first NFT project to make it to a theater near you”. The NFH team said that it will use most part of its revenue to fund this vision and grow the business.
Ahmed believes that the strength of the entire NFT space lies in the power of building communities. “Crypto is quite often seen as an exclusive club for coders and traders. However, this creative and highly educational aspect of communities is being completely overlooked,” he added.
Community-driven social media giant TikTok is also dabbling into the world of NFTs through its new creator-led NFT collection, TikTok Top Moments.
Short selling Expert compares NFT price manipulation to the oldest truck in the book
The Founder of Kynikos Associates, a New York City registered investment advisor focused on short-selling, James Steven Chanos was recently spotted criticizing the trending NFT industry at the FT Live Conference on Thursday.
According to Chanos, the NFT sphere has been overflown with “nefarious activity” and conflicts of interest. Being a noted art collector himself, Chanos does not approve of the digital era’s evolution of making and selling art. Chanos has compared the tokenized market strategy to “wash trading”. He asserted that traders can conveniently set a false, inflated market price, only to then issue another set of NFTs later, at a seemingly prominent discount, to trigger massive buying.
“What I worry about is that affiliated parties are setting prices for some of these NFTs at auctions, or so-called sales, with themselves in effect…So they can get in on the 10-fold increase that they just manufactured. This is as old as markets. This is wash trading,”, Bloomberg quoted Chanos comments at the FT Live Conference.
Wash Trading is rapidly becoming the bad fish of the NFT pond, spreading viciously throughout. Wash trade is a form of market manipulation in which an investor simultaneously sells and buys the same financial instruments to create misleading, artificial activity in the marketplace. Something that sounds like “Wash Trading” is reportedly considered to be one of the loopholes for the infamous US infrastructure Bill’s crypto clause.
Traders can use the wash trading trick to sell crypto assets, as one does with stocks, i.e., at a considerably lower price to further decrease the capital gains tax. The US government has reportedly not mentioned anything against the crypto community using the alleged wash trading loophole if people don’t repurchase the same or a substantially similar asset within 30 days.
However, Austin Woodward, the CEO, and co-founder of Taxbit told Fortune publication that, “The IRS has been aware of it it’s just been lower prioritization…Digital assets are just moving so fast in general and the 1099 reporting in the infrastructure bill has just been a higher magnitude issue for the time being.”