This week, OpenSea’s Head of Product has left the company on news that he has been trading non-fungible tokens (NFTs) on insider knowledge of when the company will be promoting individual works. OpenSea is the world’s largest exchange for NFTs, which have seen explosive growth in demand and valuations over the last few months. In August, OpenSea had two million transactions and $3.4 billion in trade volume.
OpenSea features a constantly changing rotation of NFTs on their homepage. The allegation is that Nate Chastain, OpenSea’s Head of Product, was buying these NFTs before they were featured in expectation that they would appreciate in value. These exchanges were found by a twitter user, ZuwuTV. Multiple Ethereum wallets were observed buying NFTs just before they were listed on OpenSea’s homepage; these were subsequently sold for a profit, which was then transferred to Chastain’s main wallet. Just a few days after the tweet by ZuwuTV, OpenSea announced that “ . . . yesterday, we requested and accepted his resignation.”
This debacle was poorly timed for the company as it overshadowed the launch of their mobile app. OpenSea is funded by well known venture capitalists like Coinbase Ventures, Andreessen Horowitz, Mark Cuban, and more. Their recent funding round pushed the valuation of the company over the $1 billion mark.