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Popular non-fungible token (NFT) marketplace OpenSea addressed the reports of its employee being involved in insider trading. It was only this week that it “learned that one of our employees purchased items that they knew were set to display on our front page before they appeared there publicly,” said Devin Finzer, CEO and co-founder of OpenSea, in his official statement. Calling it “incredibly disappointing,” Finzer said they are conducting a third-party review of this incident to decide on the additional steps they need to take. For now, they have implemented some policies, including that team members are prohibited from using confidential information to purchase or sell any NFTs, and they are not to buy or sell from collections or creators featured or being promoted by OpenSea.
“We’re committed to doing the right thing for our users and earning back the trust of the community we serve.”
Self-Regulation Is The Way
On Tuesday, Twitter user @ZuwuTV accused OpenSea’s head of product Nate Chastain of buying an NFT just before the marketplace, featuring it on the front page of its website only to sell it after the price had been pumped following the buzz around the main page listing. According to 8btc, the sales tied to Chastain revealed that his front-running NFT sales only profited him just under 19 Ether, worth about $68,500, as of writing. Jeff Dorman, CFA, CIO Arca applauded @ZuwuTV’s efforts noting that it is great to see the crypto community is self-policing.
“Working with regulators to come up with a new set of rules that include community self-regulation will lead to a better, fairer, & safer financial ecosystem.”
Explosive Growth
In July, OpenSea got a valuation of $1.5 billion after raising $100 million in a funding round led by a16z with participation from investors including Ashton Kutcher and Michael Ovitz. For the past few months, OpenSea has been the biggest gas guzzler on the Ethereum network, accounting for more than 14% of all the Ether burned so far. In August, OpenSea hit a new all-time high in monthly volume of $3.24 billion, up from $326 million in the previous month, according to Dune Analytics. Daily volume, however, is now going down, much like in the overall NFT scene. On August 29, on Ethereum, OpenSea daily volume hit a $235.2 mln peak and since then has been on a continuous decline to drop to $52.6 mln on Sept. 11. This week, daily volumes are seeing a slight uptick to $81 mln.