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- OpenSea has recently eliminated an employee for being involved in unethical acts within the marketplace.
- The US Attorney’s Office for the Southern District of New York announced its first-ever indictment for insider trading earlier in June.
- The OpenSea ex-employee bought NFTs before they were featured and later sold them for a higher price.
Non-Fungible Tokens (NFTs) is an industry that is growing exponentially with time. But it seems like the bigger the industry, the bigger the risks involved. Not only NFTs but all other related concepts of cryptocurrencies have witnessed some attack or the other. And this time, it’s not an attack, and the name involved is quite prominent.
The US Attorney’s Office for the Southern District of New York announced its first-ever indictment for insider trading of virtual assets earlier in the month.
It highlights that last year, Nathaniel Chastain was employed by the largest NFT marketplace, OpenSea. He was a project manager with the responsibility to select NFTs to be featured on the OpenSea’s homepage. What happened is that the value and popularity of the NFTs increased considerably after getting featured on the homepage.
The online marketplace kept the NFTs’ identities confidential till they were posted. In fact, Chastain signed a confidentiality agreement when he was hired.
The unethical actor actually did not disclose his real identity; he rather concealed it using d\virtual currencies and anonymous OpenSea accounts. For instance, he bought ten of the NFT, Flipping, and spinning prior to it getting featured on OpenSea’s homepage and then sold them for approximately thrice what he originally paid.
Overall, he purchased forty-five Non-Fungible Tokens (NFTs) and sold them for an increased price up to two to three times.
OpenSea highlighted that when they got to know about the employee’s behavior, they started an investigation and eventually asked him to leave the company. And his behavior was in violation of their employee policies and in direct conflict with their principles and core values.
The ex-OpenSea employee was eventually charged with money laundering and wire fraud, each of which carries at least 20 years in prison.
According to US Attorney Damian Williams in Manhattan, NFTs might be new, but this type of criminal fraud is not. And that today’s charges demonstrate this office’s commitment to stamping out insider trading, no matter if it occurs on the stock market or the blockchain.
Because things in the crypto world run completely based on the new technology, it has become common for the related entities to witness unethical behaviors, attacks, hacks, etc. And this is also a key factor that adds up to the critics’ skepticism. But despite that, the NFTs concept has gained significant frenzy.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
