There was insider trading, a dominating exchange, strange pricing patterns, and a Technicolor extraterrestrial in a ramen restaurant. In the wake of a few Twitter users uncovering bread crumbs pointing to illicit activity, the biggest marketplace for non-fungible tokens, OpenSea, revealed a team member was trading on sensitive information.
There were hints something was amiss. A user purchased “Spectrum of a Ramenfication Theory” for 0.25 ETH ($898) at 1:05 a.m. New York time on Tuesday. A six-fold return occurred 21 minutes later, prompting suspicions the trader knew about the publication on OpenSea’s site.
The anonymous wallet then moved approximately 7 ETH to another account. The address is the owner of a CryptoPunk NFT praised by a top OpenSea staffer on Twitter. A request for comment from the team member went unanswered.
The company explained:
“OpenSea team members are prohibited from using confidential information to purchase or sell any NFTs, whether available on the OpenSea platform or not.”
OpenSea did not identify the team member. In the unregulated realm of digital collectibles, insiders are earning enormous profits from the industry’s unpredictable value fluctuations.
NFT Craze Over the Past Year
The CryptoPunks and Pudgy Penguins collections drew a flood of speculative capital, with volumes doubling to $3 billion on OpenSea in August. Cryptocurrency activity has risen recently, with $89 million traded on Wednesday.
The company stated that it would prohibit employees from trading collections or utilizing private information to purchase or sell NFTs on any marketplace. Furthermore, It is also investigating the event.
The incident reveals the power of OpenSea advertising over what the internet terms “illiquid jpegs.” While the precise date of the “Spectrum” NFT’s site appearance remains unknown, the price spike, probably linked. There had been no trading for two weeks apart trades 17 times before that.
Twitter users and blockchain data verified a few such transactions precisely timed around OpenSea’s homepage updates. Moreover, other transactions went to the same account as the 7 ETH deposit on Tuesday.
