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First Jury Hearing in OpenSea Insider Trading Case

by Blockchain NewsApril 25, 2023

On April 24th, the Southern District Court of New York held the first jury hearing in the case against former OpenSea product manager Nathaniel Chastain. Chastain is facing two counts of wire fraud and money laundering, with allegations of insider trading with non-fungible tokens (NFTs). The case has garnered attention from the cryptocurrency and legal communities alike, as it may have a significant impact on the legal classification of NFTs.

The allegations against Chastain were filed by the U.S. Manhattan Attorney’s Office on May 31st, 2022. The prosecution claims that Chastain used his insider knowledge to secretly purchase 45 NFTs just before their listing and sold them immediately afterward for a profit. One such example cited in the filing was the case of NFT “The Brawl 2.” Chastain allegedly bought four of these NFTs “minutes before” they were featured on OpenSea and sold them within hours for a 100% profit.

Chastain’s defense attempted to remove the “insider trading” references from his charges, arguing that the term only applies to securities and not to NFTs. However, prosecutors noted that the allegation of insider trading can be used to reference multiple types of fraud in which someone with non-public knowledge uses it to trade assets. The use of the term “insider trading” to describe NFT-related charges is a new development, and the outcome of the trial may have implications for the legal classification of NFTs.

If the case against Chastain results in a conviction for insider trading, it could set a precedent for similar charges in the future, potentially leading to NFTs being classified as securities. Alma Angotti, a former U.S. Securities and Exchange Commission (SEC) lawyer, predicted this outcome in 2022, citing the Howey test, which determines whether a financial instrument is a security. Another former SEC employee, Philip Moustakis, expressed a similar concern, stating that “if this case sticks, there is precedent that insider trading theory can be applied to any asset class.”

In another recent court case, cryptocurrency exchange Coinbase supported a motion to dismiss insider trading charges against the brother of the platform’s former product manager. The defense argued that the SEC had no jurisdiction to file a lawsuit because the tokens in question did not pass the Howey test. This case highlights the uncertainty surrounding the legal classification of NFTs and the potential impact of Chastain’s trial on the industry as a whole.

The trial is expected to last several weeks, and its outcome may have far-reaching consequences for the NFT market. The case has drawn attention to the need for clear regulations surrounding NFTs and cryptocurrency in general. The outcome of this case could set a precedent for the legal classification of NFTs and have a significant impact on the future of the industry.

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Trump NFTs Generate Over $1.2M in Trading Volume

by Blockchain NewsApril 19, 2023

The latest round of digital non-fungible token (NFT) trading cards have dropped, featuring former US President Donald Trump. Polygon minted 38,001 cards, which were launched at a price of $99 each on April 18. According to data from NFT marketplace OpenSea, the Trump NFTs currently have a floor price of 0.0659 ETH ($145) and have generated over $1.2 million in trading volume. With a 10% creator fee, the sales have generated over $100,000. The initial subscription generated $3.76 million in revenue based on a sale price of $99.

Posting on Instagram, Trump revealed that he kept the price of the NFTs the same as the first series “because I want my fans & supporters to make money, & have fun doing it.” He added, “I could have raised the price MUCH HIGHER, I believe it still would have sold well, with a lot more money coming to me, but I didn’t choose to do so. I WILL BE GIVEN NO ‘NICE GUY’ CREDIT?”

The initial series, which was launched on December 15, has seen its floor price drop by 61% in the last 24 hours according to OpenSea, although the trading volume has increased by 1,011%.

In other news, Big Tech firm Meta has allowed teens from the US and Canada to use its virtual reality (VR) app, Horizon Worlds, after previously restricting access to people aged 18 and over. The decision follows a shortfall in monthly active users for the app in 2022, recording an average of just 280,000 over the year, compared to its target of 500,000, according to Statista. However, various advocacy organizations and safety groups have urged Meta CEO Mark Zuckerberg to halt plans to allow minors into its metaverse. An open letter published on April 14 argued that Meta should wait for more peer-reviewed research on the potential risks of allowing youths in the metaverse, claiming minors will face harassment and privacy violations on the VR app, which is still in its early stages. Meta has attempted to address these concerns by emphasizing its plans to mitigate risks through features such as parental supervision tools and limiting interactions between teens and adults they don’t know.

Global sportswear brand Nike also entered the NFT market, launching its first collection through its Web3 community platform, .SWOOSH. The collection features a digital version of its “iconic” Air Force 1 sneaker from 41 years ago. The Polygon-based NFTs are priced at just under $20 and are available to all .SWOOSH members. According to Nike, the NFTs will provide a range of perks such as “special access to physical products and experiences.” Nike added that it will “introduce other new utilities and benefits” to its virtual creations in the near future.

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Tagged : Meta / News / NFT / Opensea / Trading Cards / Trump

Trump NFT Floor Price Surges on Indictment News

by Blockchain NewsApril 2, 2023

The world of non-fungible tokens (NFTs) has been a hot topic in recent months, with an increasing number of investors looking to cash in on these unique digital assets. One of the latest developments in this space involves the Trump Digital Trading Cards NFT project, which has seen a surge in floor price following news of former President Donald Trump’s indictment.

According to data from OpenSea, the floor price for the officially licensed Trump Digital Trading Cards NFT project rose from 0.46 ETH (or $835 at current prices) to as high as 0.6 ETH ($1090) on March 30, the same day that a New York Grand Jury voted to indict the former president. However, the floor price has since fallen back to around the 0.51 ETH range, which is still significantly higher than the initial mint price of $99 when the project launched in December 2022.

The Trump Digital Trading Cards NFT project offered exclusive one-on-one experiences to certain NFT hodlers when it launched, including private golf sessions, dinners, and conversations with Trump. However, the recent news of his indictment could potentially impact his ability to deliver on these experiences.

The surge in the Trump NFT’s floor price is just one example of the increasing popularity of NFTs. According to a March 30 report from blockchain analytics platform DappRadar, there was $4.7 billion worth of NFT trading volume in Q1 2023, more than double that of the previous quarter. The report pointed to bullish action from the Blur marketplace, which took the market by storm during its token airdrop farming period in February.

The report also showed that there were 19.4 million NFT sales in Q1, marking an increase of 8.56%, with total volume increasing by 147% compared with the $1.9 billion posted in Q4 2022. The Ethereum network accounted for a whopping $4.1 billion worth of the volume, with second-placed Solana contributing $242 million, while Polygon ranked third with $85 million for the quarter.

Another recent development in the NFT space involves the Japanese gaming giant Square Enix, which has released NFT trading cards in celebration of the 25th anniversary of Final Fantasy VII. The Final Fantasy VII Anniversary Art Museum Digital Card Plus collection features five physical cards and a sixth digital NFT card. However, despite being called trading cards, Square Enix stated on its website that the NFTs couldn’t be traded or transferred at this stage unless the company decides to build a marketplace in the future.

The packs were dropped on March 31 and cost around $3.30 a pop, with the card artwork depicting various characters and scenery from the iconic Final Fantasy VII game. While it is unclear if the firm intends to build a marketplace to support its digital collectibles, Square Enix has been gradually ramping up its NFT and blockchain gaming-related initiatives over the past few years, suggesting something could be in the works.

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Tagged : Indictment / News / NFT / Opensea / Trading Volume / Trump

Team behind Friendsies NFT project refutes claims

by Blockchain NewsFebruary 24, 2023

The team that is responsible for the nonfungible token collection Friendsies has refuted assertions that they are “abandoning” the NFT project in the wake of a flood of allegations that they engaged in “rug pulling.” The allegations were made in response to a flood of allegations that the team engaged in “rug pulling.” After the squad was accused of indulging in “rug pulling,” these allegations were made to defend their actions. These claims were leveled as a kind of pushback against the mountain of evidence suggesting that the team engaged in “rug tugging.”

On February 21, the people who are driving the NFT project published a message to their Twitter followers stating that they would be “putting a stop” on Friendsies and “any future digital commodities” for the time being. The statement was posted on Twitter. They said that this decision will become effective right away. They justified their choice by arguing that the market provided a variety of challenges for them to overcome, which the decision had to take into consideration.

After around forty minutes had elapsed, the Twitter account that was in question was disabled, and the account of the organization that was responsible for beginning the campaign, Friendswithyou, was made private. Both of these actions were taken immediately after. As a direct consequence of this fact, stories have surfaced stating that the designers “rugged” for remuneration to the tune of almost five million dollars.

Since then, the Twitter account that is affiliated with the project has been revived, and the people behind the campaign have strongly disputed allegations that they had “given up” on the project altogether. The internet has been replete with reports that they are giving up on the project and moving on to other things, which may be translated as “throwing in the towel.” In spite of this, the account that was initially established by the company’s founders is being kept a secret by the management that is in place at the moment.

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Tagged : Crypto Collectibles / News / NFT / Opensea / Tokens / Twitter

Kevin Rose, co-founder of Moonbirds, falls victim to phishing attack

by Blockchain NewsJanuary 26, 2023

Kevin Rose, who is also the co-founder of the nonfungible token (NFT) collection Moonbirds, has been a victim of a phishing scam, which has resulted in the loss of nonfungible tokens with a combined value of over $1.1 million that were individually owned by Kevin Rose. Moonbirds was a collection of nonfungible tokens that were named after birds.

On January 25, the news was made to the 1.6 million people who follow the person who created the NFT and a co-founder of PROOF on Twitter. He advised those people to refrain from collecting any Squiggles NFTs until his team was able to have them marked as stolen until his team could do so. Until they could do so, he urged them to wait to acquire any Squiggles NFTs.

Following that, sometime in the neighbourhood of two hours later, he revealed it in a following tweet.

It is believed that Rose’s non-financial assets were depleted when he authorised a bogus signature that transferred a significant amount of his non-financial assets to the exploiter. This theory is based on the fact that Rose may have been the victim of financial exploitation. This was the occurrence that resulted in Rose’s NFTs being used up completely. Because of this, Rose’s natural defence mechanisms (NFTs) were used to their utmost potential.

An independent investigation that was conducted by Arkham discovered that the exploiter stole at least one Autoglyph, which has a floor price of 345 Ether, at least nine OnChainMonkey items, each of which is worth at least 7.2 ether, at least 25 Art Blocks, also known as Chromie Squiggles, which are each worth at least a total of 332.5 ETH, and at least one OnChainMonkey item that is worth at least a total of 332.5 ETH

It is anticipated that a total of at least 684.7 ETH, which is equivalent to around $1.1 million, was successfully obtained.

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Tagged : Altcoin / Blockchain / Crypto Collectibles / Digital Asset / Hackers / Hacks / Marketplace / News / NFT / Opensea / Phishing / Scams / Wallet

OpenSea NFT Marketplace Faces Legal Action for Alleged Lack of Security

by Blockchain NewsJanuary 26, 2023

A collector of nonfungible tokens (NFTs) has initiated legal action against the OpenSea NFT marketplace for a number of alleged transgressions, one of which is that he was prevented from accessing his account for more than three months as a consequence of falling prey to a phishing scheme. “It took them more than forty-eight hours to reply, and by that time, the stolen goods had already been sold at a drastically reduced price since the buyer had prioritised speed above value.”

In addition, the NFT marketplace took action and locked his account to prevent any more harm from occurring.

Acres, on the other hand, claims that this was not the answer he was looking for. ” Despite my continuous requests to liberate my assets, OpenSea kept my assets for ransom for almost three months,” he stated. In addition to this, the investor claims that in order to unlock his account, OpenSea asked him to provide a statement in which he lied under oath.

The NFT investor is of the opinion that the marketplace ought to be held responsible for the losses that were sustained during the period in question.

Acres is certain that the damages that have been assessed as a result of OpenSea’s conduct total $500,000 in total.

As a result of this, Acres sought the assistance of legal counsel in order to pursue legal action against OpenSea.

The attorney verified that there are several clients struggling with the same problem.

Schaefer elaborated as follows: “On the OpenSea marketplace, I have had conversations with and represent multiple clients who have had their NFTs stolen or their accounts hacked in some way.

In some circumstances, OpenSea will take responsibility for its mistakes and make the account holder whole again.

In other cases, OpenSea chooses to just disregard the problem.

Aside from this, the attorney made the following observation: “OpenSea must not let itself be distracted by growth, investor money, or gross income; instead, it should concentrate on the individuals who purchase and sell non-fungible tokens (NFTs), its consumers. The alleged theft occurred outside of OpenSea, and the products were sold before OpenSea became aware that the crime had been reported. As soon as we were made aware of the situation and received notification of it, we deactivated the products in question, and the user’s account has been unlocked ever since.”

In addition, the platform said that it has made investments in equipment and employees in order to prevent and identify theft and put a stop to the resale of things that have been stolen via its platform.

The NFT marketplace implemented a new regulation regarding stolen items on August 11, 2022, with the intention of incorporating and expanding the usage of police records.

In reaction to this, a number of users have taken to Twitter to assert that OpenSea was unable to assist them in recovering their NFT after it was stolen.

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Tagged : Business / Law / News / NFT / Opensea

OpenSea Creates Tool for NFT Creators to Enforce Royalties On-Chain

by Blockchain NewsNovember 7, 2022

NFT marketplace, OpenSea has revealed its plan to create a tool to help creators on its platform enforce creator fee payments.

It is probably not a new thing whether enforcing or not royalties which have been argued topics in the industry ever since it was introduced. While some platforms have already concluded their side of the argument, platforms such as OpenSea were yet to reveal their opinions.

OpenSea finally disclosed its thoughts and plans on enforcing royalties on-chain on Sunday. By kicking off with its plans, the platform stated, “With many marketplaces choosing to stop enforcing creator fees, to put it bluntly, the last few months haven’t felt WAGMI.”

Stating that It’s clear many creators want the ability to enforce fees on-chain, the platform believes that royalty enforcement should be the creators’ choice and not the decision marketplaces have to make for them.

“So we’re building tools we hope will balance the scales by putting more power in creators’ hands to control their business model,” OpenSea noted on Twitter. The platform would be launching a tool for the enforcement of royalties on-chain for new collections that would be launching on its platform.

According to OpenSea, the on-chain tool is a simple code piece that creators can add to their NFT contracts, as well as their existing upgradeable contracts. The code restricts NFT sales to marketplaces that impose creator fees.

Starting on Tuesday, November 8, OpenSea will enforce creator fees only for new collections that use the on-chain enforcement tool. In the coming months, the platform will also introduce additional tools serving a similar purpose and solicit community feedback on the developments.

As for collections already existing on the platform, OpenSea stated it won’t make any changes until December 8.

Overall, the platform is looking to consider different approaches to this topic, which include the proceedings of enforcing off-chain fees for some subsets of collections, permitting optional creator fees, or partnering on other on-chain enforcement options for creators.

Notably, this news comes amid the controversy of royalties enforcement in the industry. Speaking of which, NFT marketplace Magic Eden recently settled to opt for an optional royalties method for its users, giving buyers the power to either choose to pay royalties or not when purchasing NFTs on its platform.

Image source: Shutterstock

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Tagged : Blockchain / NFT / Opensea / Royalties

US Judge Rejects Motion to Dismiss Fraud Case Made by Former OpenSea Employee

by Blockchain NewsOctober 23, 2022

Nathaniel Chastain, former Head of Product at OpenSea has been denied the motion to dismiss the wire fraud case leveled against him by a Southern District Court in New York as reported by The Block.

In a memorandum and order published in the week, District Judge Jesse Furman expressed his formal disagreement, denying the motion to dismiss the indictment, stating that the argument “is without substance.”

Chastain was indicted in May by a grand jury for allegedly misappropriating OpenSea’s business information under count one charge as regards which Non-Fungible Tokens (NFT) are going to be featured thus using the information to buy NFTs before they are featured on the company’s homepage.

The indictment claims that Chastain engaged in “insider trading” of NFTs from approximately June 2021 until approximately September 2021. More precisely, Chastain is accused of stealing from OpenSea, his employer, by using the company’s trade secrets.

Chastain’s Attorney stated in his filing to dismiss the case that NFTs are neither commodities nor securities and therefore Insider trading cannot arise in any way or circumstance if there is no connection to the financial markets.

He also highlighted that the necessary bitcoin movements from one personal digital wallet to another personal digital wallet do not and cannot be claimed by the government to constitute a “financial transaction” under the money laundering legislation. The indictment must therefore be dismissed due to the reasons stated above.

OpenSea in the Face of On-going Challenges

OpenSea has continued to thrive and develop its processes in spite of challenges that are being faced in the digital ecosystem.

In August, OpenSea, the largest marketplace in the world for trading NFT goods, made public its new rules dictating how stolen digital artwork and other types of theft are handled on its platform.

Opensea has recently introduced new functionality in its platform that allows users to bulk list and buy up to 30 products at once from the same chain in a cart before paying for them all in one transaction in a recent report.

Image source: Shutterstock

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Tagged : Legal / NFT / NFT THEFT / Opensea / Policy

OpenSea CFO Resigns Less Than One Year After Joining

by Blockchain NewsOctober 9, 2022

Opensea’s Chief Financial Officer Brian Roberts has resigned from the NFT marketplace but says he is still staying as an ‘advisor’ to the company.

The former CFO of Lyft took to his LinkedIn page on Saturday to disclose his resignation from Opensea. He stated:

“Well it is time for me to come ashore from the ‘open seas.’ I’m grateful for the opportunity and proud of many accomplishments but none more than the strength of the finance team at OpenSea.”

Brian started his CFO journey at Opensea last December as the company’s first finance employee and has so far built the finance team from the ground up ever since. According to his LinkedIn update, he will stay as an advisor to the company.

His resignation from the NFT marketplace company comes amid the massive withdrawal of executives going on in the crypto industry.

Not only Brian, but in recent weeks, several administrators have been seen leaving their respective crypto firms.

Earlier this week, news media, The Block, reported that FTX’s head of OTC and institutional sales, Jonathan Cheesman, is no longer working in the firm.

In September, Brett Harrison, FTX. U.S president, announced on Twitter his departure from the crypto exchange firm and stated he would still stay in an advisory capacity.

In the same month, Kraken CEO Jesse Powell also resigned to make way for the new incoming CEO David Ripley. Bitcoin investment services firm NYDIG’s CEO Robert Gutmann and president Yan Zhao also quit the company last week.

While the reason behind this exodus differs from one another, the notable point is they all come amid extreme market conditions.

The global cryptocurrency market capitalization has declined more than 60% from its all-time high last November of $2.9 trillion to about $984 billion today – according to data from Coingecko.

Correspondingly, the NFT market trading volumes have also depreciated drastically in recent months. According to data from Dune Analytics, the NFT market weekly trading volume has decreased by 98%, plunging from $6.2 billion in January to about $100.2 million this week.

Opensea, as an NFT marketplace continues to innovate as Brian stated, the company is “heads down building,” and he remains “incredibly bullish on web3 and especially OpenSea.”

On Thursday, the NFT marketplace rolled out a new feature that allows users to list and buy up to 30 items in a single flow. According to Opensea, this new feature is more convenient and more gas efficient than buying individually.

Image source: Shutterstock

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Tagged : Bitcoin / Blockchain / NFT / Opensea

Opensea Opens Bulk NFT Listings & Purchases for Users

by Blockchain NewsOctober 6, 2022

Opensea now allows users to list and buy up to 30 items in a single flow on its marketplace, saying that it’s more convenient and way more gas efficient than buying individually.

Opensea, the largest NFT marketplace, announced in a short Twitter thread its new feature that allows users to bulk list and buy up to 30 items at once from the same chain in a cart before purchasing them all in a single transaction.

According to the team at Opensea, this would reduce gas fee costs, making the purchasing process more suitable and well organized.

The company explained, saying: “In your collected items tab, you can access bulk listings by clicking on the “+” symbol when you hover over an item card or by clicking “list for sale” in the “More Options” drop-down.”

Recently, OpenSea adopted OpenRarity – a scarcity tracking tool that allows buyers to check the rarity of a specific non-fungible token (NFT).

In addition, last week, Opensea announced its partnership with US-based global music and entertainment company Warner Music Group to help attract music fans through NFT drops.

While the marketplace continues to improve with innovation, its volume has plunged dramatically, with a lot of declines in the daily and monthly transactions on the platform.

According to data from Dappradar, Opensea went from processing $26.44 million worth of NFT transactions on June 5 to only processing $7.79 million worth of NFT transactions on October 4.

Image source: Shutterstock

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Tagged : Blockchain / NFT / Opensea