OpenSea Parts Ways With Executive Caught Trading Ethereum NFTs on Insider Info
Leading NFT marketplace OpenSea has parted ways with Nate Chastain, its former head of product, after the executive was discovered profiting from the trade of NFTs based on inside information.
“We have a strong obligation to this community to move it forward responsibly and diligently,” the company wrote in an update to its Wednesday post on the matter. “The behavior of one of our employees violated that obligation and, yesterday, we requested and accepted his resignation.”
Although OpenSea’s post did not specifically name Chastain, he has updated his Twitter profile to reflect that he is no longer with the company. Chastain still has yet to comment on the situation.
Furthermore, OpenSea wrote that it has engaged an unspecified third party to “conduct a thorough review of the incident and make recommendations on how we can strengthen our existing controls.” That investigation is still ongoing, the company writes, with no stated timeline for completion.
“As a marketplace at the forefront of this new space, we want OpenSea to be a level playing field for buyers, sellers, creators, collectors, developers, and those who are new to the space,” it wrote. “We are incredibly thankful for the support of our community, and will continue to invest in practices and policies that keep our platform open and transparent. We’ll continue to proactively provide updates as we evolve our policies and increase transparency in all that we do.”
On Wednesday, OpenSea confirmed that an employee had used privileged information to profit on the sale of NFTs. Chastain had been accused of purchasing NFTs from collections that were about to be featured on OpenSea’s main page, and then selling them for a profit afterwards. Public data pulled from the Ethereum blockchain suggested that Chastain used various additional “burner” wallets besides his main one to purchase the NFTs.
Once the NFT collections in question were then featured on the OpenSea main page and demand pushed up sale prices, the holder(s) of those additional wallets then sold the NFTs at a higher price than they were purchased for. Ultimately, the Ethereum (ETH) gained for those sales was funneled back into Chastain’s main wallet.
An NFT acts like a deed of ownership for a provably scarce digital item, and can take the form of images, video files, and more. OpenSea has recently emerged as the most popular platform for buying and selling NFTs, processing more than $3.4 billion in transaction volume in August alone, per Dune Analytics—more than 10 times the total volume from July.
OpenSea said on Wednesday that it had instituted new policies in the wake of Chastain’s behavior. The marketplace now prohibits employees from using confidential information to purchase NFTs on any platform, including its own, and also blocks employees from purchasing NFTs from collections and creators while they are being featured on its site.
Source: Decrypt.co
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Text source: Crypto Breaking News
