OpenSea CEO Devin Finzer explained that Chastain’s NFT trades were actually “misframed” as insider trading but it was still wrong nonetheless so let’s read more in our latest crypto news today.
A week ago, NFT marketplace OpenSea parted ways with a top executive that was discovered using inside information to make personal gains from the nonfungible token collections on the site. However, the OpenSEA CEO said that the debate actually erupted around the alleged insider trading and it was misframing. David Finzer argued:
“I do think there was a misframing of it as insider trading. We don’t view NFTs as financial assets, so that does not apply. That’s a very specific term for a very specific thing.”
Last week, OpenSea found itself in hot waters after the users pointed Nate Chastain as the head of product of the company who bought several NFTs right before they were featured on the main page of the platform. After the allegations of the community, OpenSea confirmed that one of its executives really was profiting from insider information and the person in question ultimately left the company. According to the US SEC, insider trading refers to buying or selling security in breach of the fiduciary duty or other relationships of trust and confidence on the basis of nonpublic information and secufrity. In other words, insider trading occurs when a person who has access to non-public information uses it to make a fast profit via trading the company’s stock.
OpenSea is a foundational layer for a giant paradigm shift in consumer tech. Today we're announcing our $100M Series B to accelerate our mission to grow the world's best NFT marketplace.
— Devin Finzer (dfinzer.eth) (@dfinzer) July 20, 2021
If someone knows that a company is going to make a huge announcement that will affect the price of the shares, they can purchase or sell the shares beforehand to make profits after this announcement goes public. In this light, while purchasing and reselling NFTs ahead of them being featured on the site is not really insider trading on paper as the act does have some similarities. Devin Finzer acknowledged that and argued that while Chastain’s actions were not actually insider trading under the legal definition, they were still wrong and could undermine the customers’ trust in the platform. Finzer continued:
“This was a relatively small thing that was done by an employee, we took action, that employee then resigned due to this. But we are putting in place more rigorous policies around the people who work at OpenSea and want to be able to participate in the NFT market. We need to do it in a way that we build really strong trust with our community—and that’s really the first priority for OpenSea.”
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