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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

#41

Post by refulgentis »

thebean11 wrote: post #31
qeternity wrote: post #26

Earlier quoted context omitted.

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 st…

Let’s say hypothetically all financial regulation is lifted tomorrow, I have a hard time believing the current “honest” participants won’t have a similar free for all. We may be saying the same thing: the difference is the regulation, not the moral character of participants.

You are saying the same thing

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

#42

Post by rednerrus »

thebean11 wrote: post #35
geofft wrote: post #34

Earlier quoted context omitted.

But the entire value proposition of cryptocurrency is how difficult it is to regulate via traditional law enforcement mechanisms. Which can be used for good, of course - the standard example being things like "transferring money across immoral embargoes". But in this case, if the difference is regulation, then the question for ordinary folks who are not themselves trying to pull a scam is - would you rather work with…

I think the underlying value prop is totally orthogonal to this thread. The fundamental value prop is that software can trustlessly, directly, and irreversibly make financial transactions, which certainly does enable regulatory arbitrage. I understand why other applications haven’t convinced most people, but that’s a different discussion.

Your value prop has to outweigh the potential negatives or there is no value prop. What OP is saying is that you can't have unregulated markets in this space the incentives to cheat are too great.

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

#43

Post by qeternity »

felixbraun wrote: post #32
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…

IMO people overestimate how much alpha is in knowing your customers’ positions (as exchange owner). Open interest, volume and price data down to seconds is available via APIs in real-time, from which it is absolutely possible to build a model of positioning. If you launch a new exchange, your biggest problem is lack of liquidity, meaning limit orders won’t fill ‘timely’ and market orders slip, which is very bad UX ob…

> IMO people overestimate how much alpha is in knowing your customers’ positions (as exchange owner).

I’ll say this as respectfully as I can: you’re wrong. Aside from algos, positions are the most closely guarded information in trading. If you know someone’s positions, you might be able to assess what their risk tolerance and stops would be, and you can exploit that.

If you’re a crypto exchange with huge highly leveraged perpetuals trading, you don’t have to guess where the stops are: you know exactly where those positions will be liquidated. Hell, you built the system to execute the liquidations.

So you just run an algo (you don’t even need funds/margin because hell you’re the exchange) to whipsaw people around and trigger this liquidations while you profit massively.

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

#44

Post by unclebucknasty »

thebean11 wrote: post #35
geofft wrote: post #34

Earlier quoted context omitted.

But the entire value proposition of cryptocurrency is how difficult it is to regulate via traditional law enforcement mechanisms. Which can be used for good, of course - the standard example being things like "transferring money across immoral embargoes". But in this case, if the difference is regulation, then the question for ordinary folks who are not themselves trying to pull a scam is - would you rather work with…

I think the underlying value prop is totally orthogonal to this thread. The fundamental value prop is that software can trustlessly, directly, and irreversibly make financial transactions, which certainly does enable regulatory arbitrage. I understand why other applications haven’t convinced most people, but that’s a different discussion.

>trustlessly

In theory. In practice, it seems to have just moved the trust problem.

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

#45

Post by felixbraun »

qeternity wrote: post #43
felixbraun wrote: post #32

Earlier quoted context omitted.

IMO people overestimate how much alpha is in knowing your customers’ positions (as exchange owner). Open interest, volume and price data down to seconds is available via APIs in real-time, from which it is absolutely possible to build a model of positioning. If you launch a new exchange, your biggest problem is lack of liquidity, meaning limit orders won’t fill ‘timely’ and market orders slip, which is very bad UX ob…

> IMO people overestimate how much alpha is in knowing your customers’ positions (as exchange owner). I’ll say this as respectfully as I can: you’re wrong. Aside from algos, positions are the most closely guarded information in trading. If you know someone’s positions, you might be able to assess what their risk tolerance and stops would be, and you can exploit that. If you’re a crypto exchange with huge highly lever…

I’m very sure that there is more money (for big high volume exchanges) in providing an environment with low liquidations (which amplify price moves against the index, again bad UX) instead of driving customers into them and profiting from trading these wicks.

The biggest risk to established exchanges is ‘regulatory alienation’ — and having millions of USD in daily liquidations probably is not helpful here.

Won’t say these trades aren’t done (data needed to build positioning models is public), my only point here; v unlikely by exchange owners.

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

#46

Post by unclebucknasty »

space_rock wrote: post #25
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

The key here is disclosure. If eBay was transparent with its bot activity, then it may be legal.

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

#48

Post by vineyardmike »

space_rock wrote: post #27
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

While i vaguely agree, crypto/blockchain/whatever has one unique aspect that is "valuable":

It creates a scarcity in an internet full of abundance. You can copy/paste a JPEG or MP3 a million times (hello piracy), but you can't own an NFT or coin you don't actually own. Sure, you can copy/paste the underlying JPEG, but thats not the same. There will only be 1 blockchain owner.

This unique property of scarcity is a valuable property for financial products, in an obvious way. The issue is that an abundance of a scarce product is ripe for fraud. Oh, and of course there is no answer for the on-chain to in-IRL conversion for things like ownership.

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

#49

Post by xrd »

I just heard the podcast with this guy a few days ago: 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.

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

#50

Post by thebean11 »

ketzo wrote: post #40
thebean11 wrote: post #35

Earlier quoted context omitted.

I think the underlying value prop is totally orthogonal to this thread. The fundamental value prop is that software can trustlessly, directly, and irreversibly make financial transactions, which certainly does enable regulatory arbitrage. I understand why other applications haven’t convinced most people, but that’s a different discussion.

“regulatory arbitrage” is a pretty hilarious way to spell “extremely profitable crime”

It's not a crime, that's the point. The regulation does not exist (yet)
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