- The marketplace has admitted that its head of product Nate Chastain purchased NFTs that he knew would be prominently displayed.
- Overnight, Chastain was accused by Twitter users of purchasing items from OpenSea’s front-page collections ahead of their general release.
One of the largest marketplaces in the non-fungible token (NFT) space has admitted that a senior employee has been getting first dibs on its most popular drops.
Twitter users accused Nate Chastain, OpenSea’s head of product, last night of using secret Ethereum wallets to secure the platform’s front-page NFT drops before general release. According to Twitter user Zuwu, who cites transactional data on Etherscan, Chastain appears to be selling these pieces “shortly after the front-page-hype profit spike.”
His actions have been compared to frontrunning or insider trading, which refers to dealing on information that is not yet public in regulated financial markets.
On September 15, OpenSea acknowledged Chastain’s actions in a blog post.
“Yesterday, we discovered that one of our employees purchased items that they knew were scheduled to appear on our front page before they were publicly visible,” said OpenSea. “This is extremely disheartening. We want to be clear that this behavior does not reflect our team values. We take this very seriously and are conducting an immediate and thorough review of this incident to ensure that we have a complete understanding of the facts and any additional steps that need to be taken.”
The company has implemented new policies that state that team members may not buy or sell from collections while being promoted, and they may not use confidential information to buy or sell NFTs.
How was this discovered?
The accusations sparked quite a stir on Twitter, with some users highlighting a tweet by Chastain on August 3 in which he appears to admit to purchasing an NFT from the artist Arya Mularama’s collection ahead of its public release. “I just wanted to get one of these before they all vanished tbh,” Chastain wrote at the time.
Others have used Etherscan to conduct their own investigation into the movement of NFT-linked funds between wallets associated with Chastain.
According to OpenSea data, Chastain owns CryptoPunk #3501, which he purchased for 26.98 ether (approximately $92,000 at today’s prices) seven months ago. Because this NFT identified his Ethereum address, it was relatively easy for observers to observe his transactions and determine that he was the one behind them.