OpenSea says employee resigned over NFT insider trading scandal

OpenSea said an employee resigned over allegations of insider trading, knowingly purchasing items before they were featured on the front page of the NFT marketplace. — REUTERS

OpenSea said an employee resigned after the operator of largest marketplace for nonfungible tokens learned that the person knowingly purchase items that they knew would be featured on the front page of the platform before being displayed for sale.

Twitter users earlier 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 said it learned of the purchases yesterday.

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 US$1bil (RM4.17bil) 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 tracker nonFungible.

Investors and speculators are buying everything from pictures of digital apes to cute penguins. Prices of NFTs can fluctuate wildly in a matter of hours, and sometimes minutes. Being featured on OpenSea’s front page likely means higher demand for the featured item.

In July, OpenSea raised a US$100mil (RM417.45mil) round, valuing the marketplace at $1.5 bil (RM6.26bil), from investors including Andreessen Horowitz. – Bloomberg

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