Product chief out nft accusations

Every transaction is timestamped, and the NFT or Ethereum traded is known. This transparency has historically allowed users to protect the community by uncovering elaborate scams, such as when “cybersleuth” Fedor Linnik discovered that the team behind a million-dollar “female-led” project was actually Russian men.

In a late-night Twitter Spaces titled “Investigating allegations” (with the monocle face emoji at the end), over 1,700 NFT collectors and traders joined to discuss the situation. Many celebrated the capabilities of the blockchain, arguing that the technology enabled a thorough investigation despite the unsettling findings.

Because there is a blockchain at least we know a lot more and we can talk about it, said fungibls, an NFT trader.

His nice words from OpenSea, but we’ve heard those words before.

LURKLOVESYOU, one of the artists featured on OpenSeas, whose work was allegedly turned upside down by Chastain, said he was not paid or knowingly involved in the trade. He also speculated that he was selected mainly because he helped OpenSea with an art exhibit, but he never received a notice from the site. From an artists point of view, I’m just a guy doing artwork and enjoying the space and community of NFT.

This shocked me a little, he said during the conversation.

In the wake of the investigation, OpenSea has implemented new policies regarding team members.

NFTs, or non-fungible tokens, are pieces of data stored on the blockchain. They can be sounds, pictures, or art which can be bought and stored on virtual wallets with unique identifiers. Over the course of the past two years, NFT hype has ballooned with some being sold for millions of dollars.
Opensea is a marketplace for NFTs, where users can buy and sell these virtual items for the cryptocurrency Ethereum.

On Tuesday evening, a Twitter user going by Zuwu said Chastain had “a few secret wallets” that purchased items that appeared on the front page of OpenSea, only to sell them a short time later.

As was noted by the Verge, OpenSea’s terms of service prohibit “manipulative trading activities.”

The user claimed they found Chastain’s wallet, which is publicly available on the blockchain. Insider was unable to confirm if the wallet was Chastain’s.

OpenSea head of product Nate Chastain, who was recently accused of a form of NFT insider trading, appears to no longer be working for the company. His Twitter bio now includes the phrase “Past: @opensea.” OpenSea has not publicly named the employee involved in the incident, but CEO Devin Finzer says the NFT trading platform asked for and received their resignation.

Yesterday, Finzer put up a blog post saying an employee used knowledge gained from working at the company to purchase NFTs that were about to be posted to the popular trading site’s homepage (and would thus likely go up in value).

OpenSea, the biggest NFT trading marketplace, said today that one of its employees used internal information to buy NFTs that were about to be featured on its homepage — and likely spike in value. Accusations were made against OpenSea’s head of product, Nate Chastain, last night after a community member publicized suspicious transactions from his wallet. “Yesterday we learned that one of our employees purchased items that they knew were set to display on our front page before they appeared there publicly,” the announcement tweeted by OpenSea CEO Devin Finzer read. “​​This is incredibly disappointing.” The site explicitly prohibits “deceptive or manipulative trading activities” in its Terms of Service.

The statement was prompted by a community-led investigation of Chastain’s trades.

The ability for Users to purchase and sell sneakers that are either sold out elsewhere or no longer being made by a company, such as Nike, typically means the buyers are paying a premium price and sellers are generating a premium sale for themselves. For instance:

(i) The Nike Dunk Low Retro White Black (2021) retailed for $110.00, however when sold on StockX, the sneaker typically sells for over $250.00.

(ii) The Dior x Air Jordan 1 Low (2020) (limited to 4,700 pairs) retailed for $2,000.00, however when sold on StockX, the sneaker typically sells for over $6,500.00.

(iii) The Nike LD Waffle (2021) retailed for $170.00, however when sold on StockX, the sneaker typically sells for over $230.00.

The main theme here is clear: secondary market retailers, like StockX, curate a marketplace for Users to sell highly touted goods.

Each Vault NFT is tied to the same physical item, stored in our brand new, climate-controlled, high-security vaults inside StockX facilities.”

So if you’re bullish on a shoe, consider investing in a Vault NFT. You take possession of the NFT immediately after the transaction is complete, meaning it is the fastest way to flip. And with no shipping costs, and market-leading low seller fees at a fraction of the cost, there’s a lower hurdle for profitability.

Every NFT is minted on the blockchain, offering owners the opportunity to invest in current culture, with cross-platform liquidity on the horizon.
Owners may also receive exclusive access to StockX releases, promotions, and events as a result of ownership.”

To use an analogy for StockX’s Vault NFT model, think of the Vault NFT as owning a stock on a trading platform such as Robinhood.

There’s also a lot of discussion about the massive electricity use and environmental impacts of NFTs. If you (understandably) still have questions, you can read through our NFT FAQ.

We have a strong responsibility to our community, and we take any breach of trust incredibly seriously.

We’ve taken additional steps to address this and are investing in policies that move the space towards greater transparency and openness.


— Devin Finzer (dfinzer.eth) (@dfinzer) September 16, 2021

The incident came to light after the NFT community began digging into transactions in Chastain’s public wallet. Community members, taking advantage of the blockchain’s openness and semi-transparency, were able to find transactions that seemed to indicate that he was secretly flipping NFTs.

On Twitter yesterday, a user named ZuwuTV posted a thread claiming Chastain operated “secret wallets” that purchased the site’s front page NFTs before they were “featured,” later selling them for a profit once the price increased due to their exposure. In the thread, ZuwuTV identified a September 14th transaction where Chastain allegedly sent 5 Ethereum (around $17,000 USD) from his known wallet to an anonymous wallet that then sent the money to a third account. According to another user, ricefarmer.eth, the account purchased four NFTs by artist Dailydust, one titled “Spectrum Of A Ramenfication Theory,” which OpenSea directly featured soon afterward.
The account is then alleged to have “flipped” the NFTs for a profit of roughly 2 Ethereum and funneled the money back to Chastain’s original wallet.
While an investigation is apparently still ongoing, OpenSea does say that it’s implemented clearer rules to prevent employees from doing this kind of thing in the future.

What’s an NFT?

NFTs allow you to buy and sell ownership of unique digital items and keep track of who owns them using the blockchain. NFT stands for “non-fungible token,” and it can technically contain anything digital, including drawings, animated GIFs, songs, or items in video games. An NFT can either be one-of-a-kind, like a real-life painting, or one copy of many, like trading cards, but the blockchain keeps track of who has ownership of the file.

NFTs have been making headlines lately, some selling for millions of dollars, with high-profile memes like Nyan Cat and the “deal with it” sunglasses being put up for auction.

Because there’s a blockchain … at least we know a hell of a lot more and can talk about it,” fungiblΞs, an NFT trader, said.

LURKLOVESYOU, one of OpenSea’s featured artists, whose work was allegedly flipped by Chastain, said he wasn’t paid or knowingly involved in the trading. He also surmised that he had been selected mainly because he had helped OpenSea with an art show but never got a heads-up from the site. “From an artist’s point of view, I’m just a guy who’s doing artwork and enjoying the NFT space and community. This has kind of shaken me a little bit,” he said during the conversation.

In the wake of the investigation, OpenSea has implemented new policies regarding team members.

Photo via: StockX

Nike is suing StockX over StockX’s creation of NFT’s using Nike Brand sneakers as a major selling point

I. Overview

In early February, Nike filed a complaint against StockX, an online based “middle-man”, for the sale and distribution of a plethora of products — predominantly sneakers. StockX prides itself on being a leading online merchant for users to buy and sell 100% authenticated products.

Buyers and sellers (collectively, “Users”) have access to reach collectors and everyday consumers to buy premium products — mainly sneakers — that cannot be found at first-hand retail stores such as Nike, Footlocker, and Dick’s Sporting Goods, to name a few.

Leave a Reply

Your email address will not be published.