The OpenSea Insider Trading Scandal
GM, we take the latest Web3 news and translate it into plain old English - so you can stay up to date, without your eyes glazing over.
In today’s edition:
An Insider Trading Scheme at OpenSea? Do Tell...
Crypto Functionality, The New Trend in 'Unique Selling Points'
RESOURCE: What is a 'Cryptographic Hashing Function'? (learn in ~7mins)
The Solana Network Went Down and the Crypto Community are Getting Tribal
Terms used (click for translation):
NFTs, Blockchain, Crypto Wallets, Web3, DeFi,
An Insider Trading Scheme at OpenSea? Do Tell...
Ever gone to the races and put $10 on a random horse which unexpectedly won?
Awesome - you’re a couple of dollars better off.
Everything is cool, if you’re the average punter.
If you own the horse track and intentionally put a bunch of dry track horses on a wet course, then you ‘randomly' win?
…things are a little less cool.
The same sort of thing just happened with a former OpenSea executive.
Here’s the story:
Last year, former OpenSea Product Manager, Nate Chastain, secretly bought dozens of NFTs right before they were about to be featured on OpenSea’s homepage.
How’d he know when to do this? It was his job to choose which ones would be featured.
Knowing that being featured on the homepage of OpenSea gets a looot of eyeballs (it’s the biggest NFT marketplace in the world), ol' Natey boy saw an opportunity.
After being listed on the homepage, he sold his NFTs for “2 to 5 times the purchase price”.
But it didn’t end there…
Problem is, as we know, all transactions on the blockchain are tracked...publicly.
( Nate knew this too).
So he used anonymous accounts and multiple crypto wallets to conceal the transactions.
Unfortunately for Nate, the FBI and Department of Justice are now charging him with wire fraud and money laundering.
(Each carrying a maximum sentence of 20 years in prison).
Here's why this is important:
Whenever a new technology emerges - especially one that facilitates the transfer of money (previously, credit cards; today, blockchain) - some people look to exploit it.
Whenever a case like this goes to court, it sets a legal precedent for anyone who tries the same tricks in the future.
While we are yet to see the verdict on this one, it’s the very first case of insider trading for digital assets.
And seeings as Web3 is here to stay, we certainly don’t think it'll be the last.
Crypto Functionality, The New Trend in 'Unique Selling Points'
Have you ever made the mistake of asking one of your marketing friends about their work?
You may have been met with a coded answer, like:
"We're working with a new product that has a great USP".
(USP = Unique Selling Point).
Over the years, there've been a range of trends in 'Unique Selling Points'.
They're essentially just functions or spin that can be slapped on existing products to differentiate them in the market (until they eventually become somewhat ubiquitous).
Some more memorable USP's being...
'Subscription' Products
Eg: Dollar Shave Club. Same old razors, with a new/more affordable delivery system (sure, why not).
'Smart' Products
Eg: Samsung Smart Fridge. Same old method of refrigeration, now with WiFi (...for whatever reason).
And the latest?
'Crypto' products
Same old practice of exchange, now on the blockchain.
Some are great! Some are kinda dumb. Others fall somewhere in the middle - into the 'sure, why not' pile.
The 'SocialGood App' (a cash back rewards system that pays out in crypto) mixes elements of 'great' and 'kinda dumb'.
...and as a result, falls into the 'sure, why not' pile.
Here's what's great about it:
Cash back rewards are largely static. You buy something, you get (say) 2% cash back, you forget about it.
Taking this same method and getting 2% back in Bitcoin (for example), would mean you'd be earning an asset that has the potential to appreciate.
Very cool!
Here's what's kinda dumb about it:
The spin!
First off - this is a sponsored post on CoinDesk (not affiliated with us in any way) - which means the SocialGood App team would have had a hand in writing it.
It makes total sense that they're going to be excited about their own product.
We love that energy! In fact, we look for it in the sponsors we work with.
But - they COME. IN. HOT.
Reading it feels like a friend of a friend's estranged aunt has just slid into your Facebook DM's, pitching an MLM product.
Point is: it's an interesting enough concept for us to write about for free (hell - we'd even try it out), the hard pitch detracts from it.
If you want to get an idea of what we're on about, click the big red button below.
Resource of the day
What is a 'Cryptographic Hashing Function'?
(learn in ~7mins)
The Solana Network Went Down and the Crypto Community are Getting Tribal
Which would you prefer?
A) WiFi that is slower than others, a little expensive, but is quite reliable.
B) No Wifi, just dial-up. Super slow. Nice n cheap. Absolutely unshakeable in its reliability.
C) WiFi that is lightning fast, super affordable, but loses signal more than you'd like.
In the world of Decentralized Finance (DeFi), Ethereum is option A), Bitcoin is option B) and Solana is option C).
With option A) the pain is slow & constant - but tolerable.
With option B) you can't do a lot, but you don't care - you just want to be sure of your connection.
With option C) the pain doesn't exist, until the network cuts out and you're all of a sudden in your living room, yelling at your modem.
Solana's network has recently hit a bit of a rocky patch, having been down eight times over the past few months.
Here's how the broader crypto community are reacting:
The Solana community aren't exactly happy about it, but they're showing patience.
...because they have to - they can't trade on an inactive network.
The Ethereum community are taking a victory lap.
And the Bitcoin community are straight up writing haikus:
“Solana just stopped.
Bitcoin can’t be stopped.
Invest accordingly."
- Bitcoin advocated Dennis Porter
We try to stay as agnostic about these platform wars as possible (the best will win out in the end anyway).
That being said, we use a bunch of products that rely on the Solana network, so we wish them a speedy recovery.
Your Daily Dose of Web3
FTX Founder Sam Bankman-Fried Signs Billionaires’ Giving Pledge
GameStop reports $76.9M in proceeds from sales of digital assets in first quarter
Binance VC arm raises $500 Million to invest in Web3 startups
Alright, that’s it for today!
Love to the family,