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Recent OpenSea Scandal Proves That Having NFT Regulation Is a Must - CoinQuora

coinquora.com 21 September 2021 07:47, UTC
Reading time: ~2 m

  • With the recent scandal at OpenSea, some believe that having fixed regulations on NFT could foster a safe trading environment.
  • However, crypto purists don’t find this idea acceptable at all

Now that there is solid proof that the NFT industry could also fall into a scandal, more people believe that NFT management is a must.

Specifically, this scandal talks about the recent incident at OpenSea — a peer-to-peer NFT and crypto collectables marketplace. Last Wednesday, September 15th, the Twitter community feasted on one account’s tweet, called @ZuwuTV. Here, he alleged that one of OpenSea’s Head of Product, Nate Chainstain, fell into insider trading.

Hey @opensea why does it appear @natechastain has a few secret wallets that appears to buy your front page drops before they are listed, then sells them shortly after the front-page-hype spike for profits, and then tumbles them back to his main wallet with his punk on it?

— ZuwuTV.eth 👻🎃🦇 (@ZuwuTV) September 14, 2021

In detail, this accusation describes how Chainstain invests in NFTs just before OpenSea features them on the website’s front page. Afterwards, he cashes it out on the subsequent price increase.

Less than a week later, Chainstain resigned.

Now, OpenSea says it implemented new policies to forbid this behavior.

For a new, more open internet that empowers creators and collectors, we will need to bake in trust and transparency into all that we do. We’re committed to doing the right thing for our users and earning back the trust of the community we serve.

Furthermore, this proves that even the most important marketplaces for NFTs — with all their potential — are still risky assets. More so, as experts say “as long as investments go up and down, there will be insiders trying to get ahead.”

According to reports, SEC requires publicly traded companies to reveal executives’ stock trades to avoid problems like Chainstain’s. However, SEC does not consider NFTs as securities. This brings up the proposition that there should be community-backed enforcement on NFTs.

Of course, not everyone agrees with this idea. Crypto purists might bristle at this resolution but reports say that there is “a path to establishing more trust in the market.” However, this might “involve ceding some ground to regulators.”

So the question is, how would companies fight this kind of problem on their own? Especially if there are no regulations whatsoever? Does this mean dedicated enforcement teams and surveillance should be done on the employee wallets?

Nonetheless, the crypto industry has an “antagonistic relationship with regulation.” Although, as reports say, “to help build trust, oversight may be price companies are willing to pay.”

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