Insider Trading Scandal

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Crypto is seeing a new kind of insider trading scandal that will likely serve as justification for some to call it an illegitimate market. What we are seeing is unfair practices to front run the NFT market.

late last week Chastain, an executive at the largest exchange OpenSea.io allegedly front-ran the market he was administering. By late Thursday, he was out of a job and is potentially facing legal questions. OpenSea.io has done more more than $1 billion in trading volume last month, but the news of Chastain’s apparent actions has soured relations between NFT enthusiasts and the platform they use as a hub.

I'm a user of OpenSea.io for Zed run and I believe it is not only unethical for him to front-run the front-page listings, but trading off of private information in traditional markets could find you serving jail time or pay hefty fines...

The problems began with a tweet posted by ZuwuTV.eth

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This user used the power of the blockchain aka its data to investigate Chastain. They showed that a wallet associated with Chastain’s avatar had been buying up specific NFTs just before they were promoted on OpenSea’s main page and then selling them on the price spike that tended to follow. OpenSea all but confirmed Chastain’s actions, calling it “incredibly disappointing.”

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By Thursday, Chastain appeared to have stepped down, updating his Twitter profile to “Past: @opensea.”

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As I mentioned at the top of the article this kind of allegation couldn’t have come at a worse time. The current administration has intent to rein in the exploding growth in the industry, even writing into the $1 trillion stimulus package new rules that, if the bill is signed into law, would regulate the industry more tightly. My guess is the era of unsupervised growth in the crypto markets looks to be coming to an end which is not a bad thing, but it's also not great because it will be excuse for many to now leave the space.

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