In a series of events that has begin to raise questions about the transparency and credibility of the centralization and manipulation of markets, foremost NFT platform, OpenSea, has confirmed that one of its employees made transactions using inside information.
OpenSea Exec Flipping NFTs
The shady practice of the company’s staff first became public knowledge through a post by a Twitter user. The user, named Zuwu, explained that after analyzing on-chain data relating to recent transactions, he observed some questionable pattern.
In the tweet, Zuwu alleged that OpenSea’s Head of Product, Nate Chastain, used a few secret wallets to buy NFTs ahead of homepage listings.
The allegations by Zuwu, which was echoed by several Twitter users, indicated that someone had engaged in flipping NFTs as they were featured on the homepage and returned the profits to Chastains public address commencing 0xa3a4.
They suspected that it was flipping because this same address is registered with the Ethereum Name Service domain natec.eth and owns CryptoPunk #3,501.
By connecting the dots, the users were able to identify the fact that the address is exactly the same Chastain also uses as his Twitter avatar.
Tracing these links, the users were able to establish that someone suspected to be Chastain used another address commencing 0x7942, to purchase an NFT. This purchase took place just a few minutes before they were promoted on OpenSeas homepage and Twitter account on Sep. 14.
Expectedly, this user was able to make significant profit which was immediately transferred to Chastains natec.eth address.
OpenSea Confirms Executive Uses Insider Information
Speaking on the development, OpenSea in a blog post confirmed the incident. “We learned that one of our employees purchased items that they knew were set to display on our front page before they appeared there publicly. This is incredibly disappointing,” the statement read.
The company added that it has immediately commenced an internal review to identify the cause of the incident to unravel what happened.