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OpenSea Scandal Shows Need for More NFT Regulation

2 30 14
21.09.2021

Will Gottsegen

Will Gottsegen is CoinDesk's media and culture reporter.

Follow @lil_smush on Twitter

There’s a lot you can do with a non-fungible token. Digital collectibles can work as passports to online communities, or ways for artists to interact with their fans. Bands have turned NFTs into backstage passes, and the writer Emily Segal used an NFT as a fundraising mechanism for an upcoming novel.

But an insider trading scandal at OpenSea, now one of the most important marketplaces for NFTs, serves as a reminder that – for all their potential – NFTs are still very much a speculative asset. In a world where everything becomes an NFT, casual collectors will need to be assured that the system isn’t rigged in favor of insiders.

This article is excerpted from The Node, CoinDesk’s daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.

Last week, Nate Chastain, OpenSea’s head of product, resigned after being accused of front-running NFTs in the way a broker might front-run a stock.

If front-running doesn’t immediately feel like a useful rubric for understanding an NFT trade, consider what Chastain is accused of doing: in a Twitter thread, an account called @ZuwuTV explained how a group of Ethereum addresses would buy up NFTs just........

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