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OpenSea product chief accused of flipping NFTs with insider information
- bko 5y ago> 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. This made my chuckle. The article that it links to was aptly titled "This $1.5 million ‘women-led’ NFT project was actually run by Russian dudes" [0] Since so much is driven by identity, is there a service where you can rent out front people to "lead" the team that check the right boxes? Kind of like the those ghost board members that sit on thousands of board of directors on Cayman Islands shell corps and just do what management says? [0] https://www.inputmag.com/culture/fame-lady-squad-nft-women-men-scandal-scam https://www.inputmag.com/culture/fame-lady-squad-nft-women-m...
- rchaud 5y ago> Since so much is driven by identity, is there a service where you can rent out front people to "lead" the team that check the right boxes? Like much of modern crypto-centric products, this is a solution in search of a problem. People are accustomed to going in headfirst without knowing who is behind these projects. It's 'decentralized' and features 'smart contracts' for 'trustless commerce'. What more do you need?
- vkou 5y ago> Since so much is driven by identity, is there a service where you can rent out front people to "lead" the team that check the right boxes? Yes, it's called stock photography. Buy a couple of pictures of smiling people from a peddler of it, and stick them on your website's 'About Us' section.
- deleted 5y ago[deleted]
- HashThis 5y agoThis makes OpenSea corrupt.
- aresant 5y agoThe NFT community has been processing this news by changing their Twitter handles to Nate's with his imagined excuses and explanations -> https://twitter.com/BoredPimp/status/1437989964680032264 https://twitter.com/BoredPimp/status/1437989964680032264 https://twitter.com/nogoodlogan/status/1438014313722040322 https://twitter.com/nogoodlogan/status/1438014313722040322 https://twitter.com/Milkman2228/status/1437971018950250499 https://twitter.com/Milkman2228/status/1437971018950250499
- chejazi 5y agoOh man. This level of shame for someone not used to it (e.g. not a public figure) will certainly lead to some trauma.
- space_rock 5y agoCriminals and scammers are not normally the sensitive types
- brightball 5y agoJust validates that the entire NFT concept is as ridiculous as it sounds.
- ryanSrich 5y agoHow does potential insider trading in any way validate NFTs being ridiculous?
- dreyfan 5y agoBecause it's all a sham and the monetary success of a particular drop is contingent upon how well it's advertised. By knowing when and what drops would be featured, that was the information asymmetry he was exploiting. There is nothing fundamentally useful about a single NFT so far. It's all speculative bullshit in every sense of the imagination. This is just the ICO scams of 2019 regurgitated [1]. [1] https://en.wikipedia.org/wiki/Greater_fool_theory https://en.wikipedia.org/wiki/Greater_fool_theory
- vkou 5y ago> There is nothing fundamentally useful about a single NFT so far. If NFTs were useful, they'd be securities, and would be regulated by the SEC. The entire point of NFTs is that they are naked, useless, purely speculative instruments. It's a big blackjack table, except unlike in Vegas, the house has an edge.
- notJim 5y ago> There is nothing fundamentally useful about a single NFT so far. Do people promise there is? NFTs essentially seem like digital collectible cards. It seems stupid to me, but so does collecting little pieces of cardboard with pictures printed on them.
- dcolkitt 5y agoDon’t you remember that time someone got caught insider trading stocks and it made everyone realize that the joint stock corporation was a bad idea.
- qeternity 5y agoThe entire crypto world is like this. MtGox pumping and wash trading with Willy bot. Bitmex trading against and liquidating customers. Coinbase hiring Litecoin creator Charlie Lee and having him frequently wash trading 99% of LTC volume. Each of these has been _the_ preeminent exchange at some point in time, just as OpenSea is for NFT. FTX was born from one of if not the largest crypto trader/market maker, and one of two known Tether customers (who apparently account for a large majority of Tethers). Alameda was the only/largest liquidity provider on FTX for some time. Binance has been similarly accused (without solid proof) of trading against customers. Of course they claim to have walls between these relationships. But then again, so did Mt Gox, Bitmex, Coinbase, OpenSea and loads of others that would take too long to mention. Crypto is a casino where there are a handful of dealers that are running thousands of tables. They are all colluding. The grift is to exchange real fiat currency for chips at their casino. It has been proven at a shocking number of blue chip institutions (dare I say a majority). Given our expected likelihood of uncovering these things, it seems highly probable that it’s happening everywhere.
- thebean11 5y agoI wonder if this is actually unique to crypto, or if it's common in any industry where participants have a massive financial incentive to "cheat"? There's plenty of instances of hedge funds and stock traders acting like this. I bet there would be more if they were under as little regulation as the crypto exchanges..
- qeternity 5y agoWell, I spent most of my career as a hedge fund trader so I can also comment on this: of course everyone is looking for the upper hand and people will bend or break rules to achieve this. But this is universal to all games, and fundamentally the game is fair. In crypto, the game is not fair. The refs are players and there are no rules.
- thebean11 5y agoCould you be more specific about what makes crypto less fair than the other markets hedge funds trade in?
- d--b 5y agoAnyone knows the legality of this? NFTs aren’t regulated, right? And OpenSea isn’t legally bound to act on its clients best interests?
- dcolkitt 5y agoNot against the law at all. If market manipulation and insider trading of art was illegal half the gallery owners, collectors and critics in New York and London would be in jail. Bad look for OpenSeas and unethical? Sure.
- space_rock 5y agoYou can't rig an auction. That's illegal. eBay can't trade in it's own items to get the prices higher
- mekkkkkk 5y agoAnyone surprised by this must be living under a rock. NFTs and crypto in general has turned into mostly an unregulated playground for market manipulation. It's sad to see these fantastic technologies falling into darkness. Same can be said about the majority of the internet and its phenomenon to be honest.
- space_rock 5y agoI was agreeing with you until you said fantastic technology. Crypto has always involved outrageous fraudulent claims about the technology in its sales pitches. The technology they sell does not exist. Decentralised trading is still incomplete research. It's vaporware
- zachmx 5y agoJust curious, why do you say decentralized trading is incomplete research/vaporware? There are dozens of decentralized exchanges that are up and operating, including sites like Dydx and uniswap. Obviously these are still experimental, but they do work.
- space_rock 5y agoThey are pseudo decentralised. They have a point of failure. Take down the operator and the exchange is gone. Happened before with an ethereum exchange. Ethereum delegated some control to miners which isn't decentralised
- yokem55 5y agoCare to explain why you think uniswap isn't decentralized trading? The contracts are immutable, 100% on chain, and can be interacted with without any help from the uniswap web site.
- space_rock 5y agoEthereum delegated some control to miners for within block trading which isn't decentralised. Between block trading is possible but you'd have to wait 10mins for a trade
- Animats 5y agoNot clear whether this is even illegal, though. As long as they refer to existing objects, they're not securities, and since they're all different, they're not commodities. So they escape both SEC and CFTC regulation in the US. (The UK's Financial Conduct Authority, though...) That's the whole point of NFTs. In 2019-2020, the SEC cracked down on Initial Coin Offerings. They grandfathered in the early coins, and shut down some out and out scams. Then the SEC started sending out letters, "explain to us why your ICO isn't a security offering requiring registration as an IPO". Suddenly there was a huge drop in ICOs. So then came NFTs, which looked like they were going to evade regulation. Then some of the NFT issuers started making NFTs which looked like IPOs. Selling land in virtual worlds that don't exist yet, for example. That's a no-no. That passes the Howey Test - value paid into a common enterprise, with the expectation of future gains, to be derived from the efforts of others. That's the definition of an investment in the US. If the value of an NFT depends on the future efforts of the organization involved with the NFT, it's a security. That doesn't quite seem to be the case here, though. It's legal, and fairly common, for an art dealer to front-run artworks or have shill buyers. You're supposed to know what the art is worth. Selling NFTs in bulk, though, might start to look like a security for regulation purposes. Selling fractional shares in NFTs definitely is. The SEC is working on a guidance memo. If you're starting up an NFT, you definitely need some time with a securities lawyer. Remember, the whole point of most NFTs is to try to evade securities regulation. That comes with serious legal risks. [1] https://www.howeycoins.com https://www.howeycoins.com
- Y_Y 5y agoWhat does "refer to existing objects" mean? Are these any better than baseball cards or top trumps?
- vkou 5y agoI don't think 'refer to existing objects' is the meaningful bit, here. You can print and sell and trade and auction baseball cards of players that don't exist, and they'll still be regulated the same way as baseball cards of players who do. (Which is to say, not at all.) I think the meaningful bit is whether or not an NFT is a baseball card, or ownership of... Some yet to be generated value, somehow derived from a baseball card. The latter is obviously a security, the former is, to my layman eyes, probably not. Continuing on this train of thought, it should be worth noting that useless things (Ownership of a baseball cards) are not regulated, but useful things (Ownership of a stake in the value generated by a baseball card) are regulated. It makes sense, in a perverse way - if someone wants to spend their money on a useless thing, that's on them. If someone wants to spend their money on a useful thing, then, well, the buyer should expect some assurance that they are not being completely lied to and swindled. (Which is why the SEC regulates securities markets, and not art auctions.)
- deleted 5y ago[deleted]
- iblaine 5y agoReminds me of a situation where I worked at an affiliate network that tracked ads and commissions. Adsense was relatively new back then and I figured out how to match impressions to clicks to AdWords keywords to sales. You could approximate the ROI/click for keywords on Google and to some extent SEO. The reaction from upper management was excitement then fear that the tool would get out, which it eventually did. Surely this will be a learning experience for OpenSea. It does happen. Here's another example. [1] [1] https://www.theatlantic.com/business/archive/2015/10/draftkings-fanduel-fantasy-sports-insider-trading-advantage/409435/ https://www.theatlantic.com/business/archive/2015/10/draftki...
- alainchabat 5y agoAuthor of https://project-memento.com https://project-memento.com here, this is a disapointing news to see as a NFT creators. NFT aren't shown equally on their website
- xrd 5y agoI just heard the podcast with this guy a few days ago: https://podcasts.google.com/feed/aHR0cHM6Ly9hbmNob3IuZm0vcy8xYmVlOTM0NC9wb2RjYXN0L3Jzcw/episode/Y2JkYjdhNmYtMjczMy00ZjNjLTliMDYtYzZiMzNkNzU3OGI3?ep=14 https://podcasts.google.com/feed/aHR0cHM6Ly9hbmNob3IuZm0vcy8... It's crazy that a company like OpenSea, that is a massive success story in the space, can't keep an employee happy enough to wait for his riches to come. There are so many fascinating and brilliant things happening in crypto but they get overshadowed by grifters like this.