Rumors of insider trading at NFT marketplace OpenSea are true, according to a statement from the start-up, which was recently valued at $1.5 billion.
"Yesterday we learned that one of our employees purchased items that they knew were set to display on our front page before they appeared there publicly,"Â the company wrote in a blog post Wednesday.
While the statement did not identify the employee, on Tuesday evening, OpenSea's head of product, Nate Chastain, was accused by Twitter user @ZuwuTV of using secret crypto wallets to front-run sales on the platform.
In a series of posts that have since gone viral, the Twitter user traced transaction receipts via the public blockchain, allegedly showing that Chastain would buy an NFT just before OpenSea featured the piece on the front page of its website, and then sell it after it jumped in price following the buzz of its main page listing.
In OpenSea's written statement, it called the incident "incredibly disappointing" and said that it is "conducting an immediate and thorough review."
OpenSea would not confirm the name of the employee to CNBC "as of right now," but a spokesperson said the company would "update everyone eventually after an internal investigation is complete."
Chastain's public LinkedIn account is now listed as "unavailable."
Chinese blockchain and crypto news platform 8btc traced the sales allegedly tied to Chastain and his front-running scheme, noting a collective profit of 18.875 ether, or about $67,000 at today's price. CNBC did not independently confirm this figure, and OpenSea told CNBC it is not revealing how much the employee profited from the plan.
OpenSea logged a record $3.4 billion in transaction volume last month, according to Dune Analytics. Despite the billions of dollars worth of ether trading hands on the platform, the start-up seems to have been relatively lax with respect to restrictions around employees using privileged informat...