Even in the crazy world of NFTs, “non fungible tokens”, digital objects certified by blockchain systems and paid for in cryptocurrencies, are starting to develop phenomena not unlike those of international finance. The first documented case of insider trading in this (relatively) new but crackling sector.
An employee, who would even be credited by several sources as one of the top managers, that is, the product manager Nate Chastain, bought eleven digital items before putting them up for sale with great prominence on the platform’s home page, kicking off the auction. AND reselling them shortly after, so as to accumulate a considerable profit. The allegations sprang from a sort of collective investigation by the OpenSea community: many members, for example on Twitter, have identified and documented suspicious transactions on the public wallet of the user believed to be Chastain. The platform confirmed the fact but not the identity of the scammer: “Yesterday we learned that one of our employees bought, before they were published, items that he knew would be highlighted on our home page” wrote the CEO Devin Finzer. “This is an incredibly unpleasant story.” Obviously, the marketplace prohibits “deceptive or manipulative trading activities” in its Terms of Service.
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In his investigation, a user baptized on Twitter ZuwuTV, for example, identified a transaction on September 14 in which Chastain allegedly transferred 5 Ethereum, about 15 thousand euros at current prices, from his public wallet to an anonymous one who would then have turned the funds over to a third secret account. According to another user, ricefarmer.eth, this third wallet would have made the purchase of the NFTs of the artist Dailydust, including one entitled “Spectrum of a ramenfication theory” that OpenSea would have put up for sale shortly after (and which is still in sale). The accusation, corroborated by the transaction documentation, is therefore that the account subsequently “resold” the NFTs for a profit of about 2 Ethereum, about 6 thousand euros, and redirected the money to Chastain’s original wallet. OpenSea has not confirmed in detail which NFTs were involved in the bad deal.
Not enough: apparently Chastain (or whoever he was) wouldn’t be new to this kind of trick to round up, by purchasing NFTs of a certain interest before they are displayed on the home page of the site which, among other things, is edited by hand and not automatically. In short, as product manager he was aware of the most interesting objects destined for auctions and, at the same time, the maximum freedom on the prominence to be given to them on the platform. But the Ethereum blockchain is transparent in the documentation of all transactions, permanently recorded on a public ledger: in this way the user-investigators were able to follow the money, back and forth from Chastain’s public wallet (or at least presumably linked to him).
The top manager, formerly presumed, has not commented and has yet to produce some public statement. On the other hand, OpenSea has not confirmed that it is really him. In the meantime, however, the platform has quickly established new rules intended for the internal team. Employees “may not buy or sell from collections or creators when they are promoted on the marketplace” and “may not use confidential information to buy or sell NFTs of any kind, whether available on OpenSea or not”. Maybe we had to get there first.
Tutorial
How to create an NFT and how to sell it online
by Emanuele Capone
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