The “eBay of NFTs” is running into a scam after it admitted that one of its employees traded crypto digital assets using insider information from the platform.
Yesterday, a top executive of NFT platform OpenSea was accused of front-running sales on the platform for purchasing pieces from the NFT collection before appearing on the platform’s homepage. according to twitter user @ZuwuTV, The startup’s product chief was using the secret crypto wallet to buy drops before being listed on OpenSea’s main page, selling them shortly after OpenSea was publicly highlighted, and transferring the profits to their main account. were bringing back. Users have been linked to certain transactions from accounts linked to the executive on the public blockchain, including an NFT drop, which was actively listed on the platform’s front page at the time.
Today, OpenSea acknowledged the incident, in a blog post that it “learned that one of our employees had purchased items that they knew were ready to be displayed on our front page before they were publicly displayed.” The company did not identify the employee but said they were “immediately” reviewing the incident. The startup, which was recently valued at $1.5 billion after raising a $100 million Series B from Andreessen Horowitz, added in an unsigned blog post that the event was “incredibly disappointing.”
“We are reviewing yesterday’s incident thoroughly and are committed to doing the right thing for OpenSea users,” OpenSea CEO Devin Finzer said in a statement. Tweet.
OpenSea, which recorded $3.4 billion in transaction volume last month, appears to be doing nothing to prevent employees from using confidential information to buy or sell NFTs on its own platform for its own users. There was no rule. The company elaborated that it is now implementing a policy that team members “may not buy or sell from collections or creators while we are showing or promoting them,” and that they ” We are prohibited from using Confidential Information to buy or sell any NFTs, whether or not available on the OpenSea Platform.”
Despite little official guidance from the SEC on the crypto asset class, most NFTs are not generally considered securities. Some in the space have questioned whether the various mechanics of buying and selling, along with the ongoing reward structures, could propel some NFT sales into the securities space.
“Many are tempted by the dramatic jump in the value of new digital assets,” Senate Banking Committee Chairman Sherrod Brown said at a hearing yesterday. the block – where the relationship between the cryptocurrency market and SEC enforcement was discussed. “Some professional investors and celebrities make earning lakhs easy. But, as we’re reminded time and again, it’s not that easy – and too often, one’s quick gains come at the expense of workers and entire communities.”
We have reached out to OpenSea for further comment.