The largest non-fungible token (NFT) marketplace OpenSea was engulfed by a scandal that alleged that one of the top executives of the platform was involved in insider trading. The startup has confirmed the wrongdoings of the accused employee that has resigned now.
What Happened?
It all started on Tuesday, September 14th, when a Twitter user Zuwu accused that OpenSea’s head of product, Nate Chastain, was using secrets wallets to buy the NFTs before they were listed on OpenSea’s front page. In this way, the accused employee was using his secrets wallet for front-running sales.
The Twitter users Zuwu wrote:
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?
— Zuwu (@0xZuwu) September 14, 2021
“Hey @opensea why does it appear @natechastain has a few secret wallets that appear 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?”
Users provided the details of a handful of transactions from accounts linked back to the executive on the public blockchain including an NFT drop that was, at the time, actively listed on the front page of the platform.
OpenSea Responds Immediately
As the rumors spread, the OpenSea team launched an immediate investigation into the matter. In a statement on Wednesday, September 15, co-founder and CEO of OpenSea Devin Finzer, said:
“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 third-party review of this incident so that we have a full understanding of the facts and additional steps we need to take.”
The team also implemented two new policies that state that “OpenSea team members may not buy or sell from collections or creators while” they are being featured or promoted, and are “prohibited from using confidential information to purchase or sell any NFTs, whether available on the OpenSea platform or not.”
In the updated statement on Thursday, September 16, without mentioning the name of the accused employee, Opensea admitted the wrongdoings of its employee that was forced to resign. The statement reads:
“The behavior of one of our employees violated that obligation and, yesterday, we requested and accepted his resignation.”
The details about this front-running sale scandal are sparse but will come out as the internal investigation completes.
OpenSea’s Mobile App is Coming
Despite this unpleasant incident, OpenSea is moving as it is launching an app for users in the Google Play and Apple App Store. The platform hinted about the app in the August recap but the date for the launch isn’t confirmed yet.
