Major NFT marketplace OpenSea confirmed rumors that one of its employees was involved in insider trading, according to a blog post published on Wednesday.
The company explained that one of its employees had an advanced list of NFTs set to display on the OpenSea website’s front page.
Exploiting the non-disclosed information, the employee had purchased multiple NFTs in advance in anticipation that they would amass large profits in reselling. The collectibles displayed on the home page usually gain more traction, causing their price to rise.
Expressing their disappointment in a statement, the company’s blog post read:
“We want to be clear that this behavior does not represent our values as a team. We are taking this very seriously and are conducting an immediate and thorough third party review of this incident so that we have a full understanding of the facts and additional steps we need to take.”
The blog post did not give out employee’s personal information. However, the rumors first came to light after a Twitter user @ZuwuTV accused OpenSea’s head of product, Nate Chastain of insider trading. He wrote:
“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?”
The Twitter user explained that they traced the transaction receipts via the public blockchain and they noticed that Chastain would buy an NFT just before it featured on the home page, and then resell it after the value of NFT displayed rose.
News media CNBC reported that Chinese blockchain and crypto news platform 8btc traced the sales allegedly tied to Chastain. The trace led to an alleged profit of 18.875 ether, or about $67,000 according to current prices. OpenSea has, however, not disclosed the profits earned by the employee.