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OpenSea product chief accused of flipping NFTs with insider information

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Re: OpenSea product chief accused of flipping NFTs with insider information

#21

Post by qeternity »

thebean11 wrote: post #17
qeternity wrote: post #9

The 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…

I 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..

Well, 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.

Re: OpenSea product chief accused of flipping NFTs with insider information

#22

Post by vkou »

bko wrote: post #2

> 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…

> 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.

Re: OpenSea product chief accused of flipping NFTs with insider information

#23

Post by thebean11 »

qeternity wrote: post #21
thebean11 wrote: post #17

Earlier quoted context omitted.

I 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..

Well, 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.

Could you be more specific about what makes crypto less fair than the other markets hedge funds trade in?

Re: OpenSea product chief accused of flipping NFTs with insider information

#24

Post by vkou »

dreyfan wrote: post #10
ryanSrich wrote: post #8

Earlier quoted context omitted.

How does potential insider trading in any way validate NFTs being ridiculous?

Because 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.wik…

> 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.

Re: OpenSea product chief accused of flipping NFTs with insider information

#25

Post by space_rock »

Animats wrote: post #13

Not 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…

Can eBay pump up the price of it's own items with fake trading bots? No that's fraud. There are laws around auctions and trading. I'm guessing it's illegal

Re: OpenSea product chief accused of flipping NFTs with insider information

#26

Post by qeternity »

thebean11 wrote: post #23
qeternity wrote: post #21

Earlier quoted context omitted.

Well, 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.

Could you be more specific about what makes crypto less fair than the other markets hedge funds trade in?

Read my original comment. For all of the Occupy Wall Street rhetoric, overwhelming majority of people in finance are law abiding participants. That’s not to say that they’re particularly moral or honest people. But in regulated markets, regulators seek to make rule breaking a negative EV outcome, so rule following becomes the logical behavior for a self interested actor. Regulators might not always succeed, but it still shifts the outcome distribution massively.

In crypto, the opposite is true. Because there are no penalties, otherwise malicious behavior is encouraged. First and foremost: exchanges trading against customers. This would never be allowed in a regulated market, just like we would never allow judges to wager on the cases over which they preside. It creates a horrible conflict of interest. But in crypto, conflicts of interest are the most successful business models (across a load of projects).

Crypto is mostly regulatory arbitrage. I’ll be the first to change my mind when the facts change, and maybe I’m just not as visionary as every other lambo hopeful. But as it stands today, this is the reality.

Re: OpenSea product chief accused of flipping NFTs with insider information

#27

Post by space_rock »

mekkkkkk wrote: post #12

Anyone 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.

I 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

Re: OpenSea product chief accused of flipping NFTs with insider information

#28

Post by space_rock »

chejazi wrote: post #18
aresant wrote: post #6

The 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/nogoodlogan/status/1438014313722040322 https://twitter.com/Milkman2228/status/1437971018950250499

Oh man. This level of shame for someone not used to it (e.g. not a public figure) will certainly lead to some trauma.

Criminals and scammers are not normally the sensitive types

Re: OpenSea product chief accused of flipping NFTs with insider information

#29

Post by iblaine »

Reminds 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/draftki...

Re: OpenSea product chief accused of flipping NFTs with insider information

#30

Post by space_rock »

dcolkitt wrote: post #15
d--b wrote: post #11

Anyone knows the legality of this? NFTs aren’t regulated, right? And OpenSea isn’t legally bound to act on its clients best interests?

Not 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.

You can't rig an auction. That's illegal. eBay can't trade in it's own items to get the prices higher
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