OpenSea acknowledges NFT insider trading incident

[ad_1]

Opensea update

OpenSea, the most popular digital collectibles trading platform, has launched an internal investigation after admitting that one of its executives used internal knowledge to purchase items before market promotions.

The website sells NFTs or digital tokens representing artworks, Confirmed on Wednesday An employee “purchased items they know will be displayed on our homepage before they appear publicly.”

Due to the strong interest of users, the price of collectibles usually increases when they are put on the platform’s homepage.

The disclosure is in User on Twitter wrote Nate Chastain, the head of product at OpenSea, appeared to sell the NFT “soon after the front-page hype profits soared” and then remitted the funds back to his main digital wallet.

User ZuwuTV cited publicly available transaction data on the Ethereum blockchain, which is an immutable ledger that supports the creation of most NFTs, and shared screenshots of what they found.

Some Twitter users compared this activity with preemptive trading or insider trading in regulated financial markets, which is illegal in most markets—using non-public knowledge to gain a trading advantage.

Such rules do not apply to the loosely regulated digital token trading market, despite the fact that global regulators Is carefully observing Its existing law enforcement powers.

When the news came out, OpenSea had become one of the main platforms to meet the following needs The growing NFT mania, Artists, fashion companies and even sports groups are racing to join the market as distributors.In the past month, the market has Promote According to data from DappRadar, the value of NFT transactions on its platform exceeds 3.8 billion U.S. dollars, and some of the digital artworks sell for millions of U.S. dollars.

But some experts warn that this craze may also fuel an evil activity that is free and has little investor protection.

OpenSea said on Wednesday that the incident was “incredibly disappointing.” It added that it is conducting an immediate review of the incident in order to “fully understand the facts and take other measures.”

Chastain could not be reached immediately for comment.

OpenSea also stated that as a result of this incident, for the first time it has formulated a formal policy prohibiting its employees from buying or selling digital collectibles before displaying or promoting them on the platform, and prohibits the use of confidential information to buy or sell any NFT “regardless of whether in Available on the OpenSea platform”.

This incident highlights the immutability of blockchains such as Ethereum, which means that anyone with technical knowledge may find obvious unethical behavior.

In July, OpenSea raised US$100 million in a round of financing led by Andreessen Horowitz, a well-known venture capital company, with a valuation of US$1.5 billion.

Additional report by Philip Stafford in London



[ad_2]

Source link