A blog released by OpenSea on Sept 15 confirmed that one of their executives used proprietary information to profit from NFT sales. The team member in question, Nate Chastain, was, until today, the Head of Product for the platform. Chastain would buy NFTs he knew would be featured pieces that were more likely to rise in price. He would then turn around and unload the art at an inflated price.
The scam was originally uncovered by a Twitter user named Zuwu who asked “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?”
The statement from OpenSea confirms that “one of our employees” did in fact buy NFTs they knew were going to display on the front page before they were on sale to the general public. OpenSea did not confirm the identity of the employee, but transaction records show that it is more than likely Chastain. “This is incredibly disappointing. We want to be clear that this behavior does not represent our values as a team,” OpenSea adds.
What is next for OpenSea?
OpenSea says they will be conducting “an immediate and thorough review of the incident,” in the hopes of understanding just what happened and what the next steps are in the process. Additionally, OpenSea has put a pair of new policies in place to avoid such situations in the future. First, no OpenSea members cannot buy or sell from collections or creators while OpenSea is actively promoting them. Second, team members are barred from using any “insider information” to buy or sell any NFT. This includes NFTs on other platforms as well as OpenSea.
The statement from OpenSea concludes with a statement that reads “For a new, more open internet that empowers creators and collectors, we will need to bake in trust and transparency into all that we do. We’re committed to doing the right thing for our users and earning back the trust of the community we serve.”