OpenSea’s Product Lead Accused of Using Insider Knowledge to Profit From NFTs Drops
The Head of Product at OpenSea has been accused of insider trading – buying NFTs before they were released and selling them after the front-page hype spike for a quick profit.
An OpenSea senior employee was caught doing inside trading of NFTs before being dropped on the platform and selling them at a profit. Shortly after, the project published a blog post admitting the wrongdoing.
Product Lead Had “Prior Knowledge” of NFTs Drops
Users on Twitter accused Nate Chastain, Head of Product at OpenSea, of using secret ETH burner wallets to buy NFTs before they were unloaded on the front page of OpenSea. What gave him away was making the mistake of sending the profits to his own public address. The transactions were first found by a user on Twitter who revealed that Chastain has been snapping up 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
He made 19 ETH in total – around 66,911 USD, according to data collected by BlockBeats China:
According to OpenSea data, Chastain is the owner of CryptoPunk #3501 – purchased for 26.98 ether. This NFT revealed his Ethereum address to the community, allowing anyone to see Chastain’s transactions.
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?— ZuwuTV.eth 👻🎃🦇 (@ZuwuTV) September 14, 2021
OpenSea Confirms the Allegations
OpenSea confirmed the allegation in a blog post on Wednesday. “This is incredibly disappointing,” the post said. “We want to be clear that this behavior does not represent our values as a team.”
“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 statement reads.
OpenSea has not disclosed the status of Chastain’s employment with the company. This is not the first time that the same person has been accused of insider trading, though. Chastain previously admitted on August 2 to buying in-demand artwork by a featured artist, receiving harsh criticism from the community.
OpenSea has been the leading NFT marketplace for collectors. In August, the platform recorded $1 billion in trading volume. Yet this event has opened criticism once again, many users calling out centralization and market manipulation – besides lack of transparency from NFT collectors in recent weeks.
As CryptoPotato reported, at least $100k in NFTs were lost due to a bug found in the marketplace. While the issue was patched, the affected users were still not able to get back their NFTs.