A statement recently indicated that insider trading on an NFT platform was valued at $1.5 billion. An official startup statement showed that a huge purchase had been made by one of the employees though the name is still unknown.
The purchase was an exclusive one because the exact items were supposed to be dispatched for public purchase. The issue turned hot when Nate Chastain who is the current OpenSea head of the product line blamed Twitter client @ZuwuTV.
@ZuwuTV has been using private crypto wallets to carry out front sales. Investigations have been made and reports indicate that front sale purchases had been going for a long time. How did OpenSea discover all this?
Well, a chain of posts had gone prominent on Twitter and there was a great need of tracing their origin. They have traced through public blockchain and further indications show that Chastain was somehow able to exclusively purchase an item before it was announced for public sale.
The process is simple because OpenSea was supposed to feature the item first and when it jumps in pricing, it would be legible for mass sale. All this buzz was discovered on OpenSea's official website. OpenSea was obviously disappointed as shown by details in their statement.
Circumstances in the report indicated that they were going to officiate a proper review. However, OpenSea held beck the name of the actual employee who fulfilled the transaction. Members would have to wait after a complete investigation to be carried out for possible disclosure of the identity.
At the moment, the Chastain LinkedIn account has been shaded until further notice. As the issue was gaining momentum, 8btc a Chinese firm based in China managed to track the actual sales fulfilled by Chastain and everything that has to do with his actual exclusive purchasing plans.
They discovered that a total of 18.875 ethereum had been gained. 18.875 ethereum is currently valued at $67.000. 8btc confirmed the figure but CNBC is yet to confirm the amount because OpenSea was not prepared to confirm the profited plan and amounts. Looking at OpenSea, they had managed in recent months to run transactions amounting to $3.4 billion.
However, the actual startup seems to have been lax with specific restrictions on employees who were utilizing important and privileged information to invest in NFT. OpenSea has changed plans and it is now looking at a different picture.
Since the unfortunate incident, OpenSea has released a statement that 2 official employees policies will be enacted to avoid such mishaps in the future. One of the policies is barring OpenSea staff from trading with collectors on featured items.
The second policy sees employees being banned from using private details to fulfill transactions or sell on any NFTs. Such moves have been put in place to cover that regulator loophole which was seemingly affecting the whole operation. If one looks at the actual regulatory whereabouts of NFT, one would undoubtedly notice that they lay in a gray zone. There are actually no official and claimed securities.
There is that big legal gap to be filled but strides are actually being made to achieve the common cause. The trading community has clearly learned one or two things from this incident. One of them is that blockchain transparency is good in cases of scheming behavior.
All details concerning transactions of any volume are kept safe and documented. There is a great need for appropriate legal stands to achieve an authenticated NFT and OpenSea trading platform. Regulators have to focus on the prize before many perpetrators try to repeat the same scandal again.