OpenSea Confirms Insider Trading, Head of Product Development Resigns

September 17, 2021, 10:15 AM AEST - 1 month ago

OpenSea’s product lead, Nate Chastain, has been accused of insider trading of NFTs promoted on the front page of the platform, allegations confirmed by the OpenSea team. He has since resigned from his position.

The accusations were first made by a Twitter user who discovered that Chastain had been snapping up NFTs for a while.

Chastain reportedly bought NFTs using secret Ethereum burner wallets before they were unloaded on the homepage, benefiting from the front-page hype spike and then selling them for a quick profit. This is similar to when a token’s price boosts after getting listed in a crypto exchange such as Coinbase or Binance.

According to data from OpenSea, Chastain is the owner of CryptoPunk #3501, purchased for 26.98 ETH. This NFT revealed his address to the community, allowing anyone to see the transactions. What gave Chastain away was that he made the mistake of sending the profits to that public address.

It also appears this isn’t the first time Chastain has been caught snapping NFTs:

OpenSea Confirms Insider Trading Allegations

OpenSea confirmed the allegations in a blog post. “This behaviour does not represent the team’s core values,” the team said.

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. We are taking this very seriously and are conducting an immediate and thorough review of this incident so we have a full understanding of the facts and additional steps we need to take.

OpenSea blog post

While OpenSea has seen record growth over recent months, this event has once again opened up criticism of the protocol. Some users were calling out market manipulation and centralisation, yet the most strident critics are NFT collectors – as Crypto News Australia reported last week, over US$100k worth of NFTs were recently lost due to an OpenSea bug found in the protocol by a user.

Disclaimer: The content and views expressed in the articles are those of the original authors own and are not necessarily the views of Crypto News. We do actively check all our content for accuracy to help protect our readers. This article content and links to external third-parties is included for information and entertainment purposes. It is not financial advice. Please do your own research before participating.