• A former OpenSea executive has been sentenced to three months in prison for insider trading. 
• The executive, Nathaniel Chastain, reportedly made over $50,000 in 2021 from his NFT insider trading scheme. 
• Chastain pled not guilty last year, claiming that no one told him he couldn’t use the insider information. 

A former OpenSea executive has been sentenced to three months in prison for perpetrating the first-ever insider trading scheme involving NFTs. Nathaniel Chastain, who worked as the Head of Product for the NFT marketplace, was found guilty of fraud and money laundering by a federal grand jury earlier this year. The former executive was convicted less than two weeks after his trial began in April this year. 

3 Years Supervised Release For Ex-OpenSea Executive After Jail

According to a press release by the U.S. Attorney’s Office for the Southern District of New York, Nathaniel Chastain’s three-month-long prison term will be followed by another three months of home confinement. The former OpenSea executive will then face three years of supervised release. 

Today’s sentence should serve as a warning to other corporate insiders that insider trading – in any marketplace – will not be tolerated.”

Damian Williams, U.S. Attorney SDNY

Federal prosecutors sought a two-year sentence for Chastain, citing a similar insider trading case involving a Coinbase manager who was sentenced earlier this year. However, the judge overseeing the ex-OpenSea executive’s case gave a lenient sentence, stating that he was a first-time offender and the proceeds from his NFT insider trading were considerably less than the Coinbase case. 

Chastain was indicted by federal prosecutors in June last year. He was accused of abusing his position at OpenSea to buy NFTs that were set to be featured on the marketplace’s homepage. The former executive made more than $50,000 between June 2021 and September 2021 through his insider trading scheme. 

Chastain reportedly used multiple wallets to route his funds and cover his tracks. After the former OpenSea executive was formally charged, his lawyers entered a not-guilty plea and later argued that no one told him that he couldn’t use or share the insider information in question. 

The post Former OpenSea Executive Sentenced To 3 Months In NFT Insider Trading appeared first on Cryptology IQ.

Across Ethereum-native NFTs marketplaces, Blur remains dominant as the NFT marketplace and aggregator, accounting for nearly 60% of all trading volume on the chain, Messari found in a new report. 

Blur remains the dominant Ethereum NFT marketplace, with ~60% of total volume. pic.twitter.com/FpV7yDG1YN

— Messari (@MessariCrypto) August 21, 2023

Blur has gained significant traction since its launch in October 2022, overtaking industry leader OpenSea. Its popularity skyrocketed after its token airdrop event on 14 February. 

Prior to the airdrop, Blur held 48% of the NFT transfer volume in the market. However, its share jumped to 78% a few days after the airdrop. This caused OpenSea’s NFT transfer volume to drop by 21%.

While NFT trading volume across Blur has declined since then due to the drop in the general market interest in NFTs, data from Dune Analytics revealed that the daily volume of NFT transactions completed on Blur still exceeds OpenSea. 

Collectors have continued to shy away from NFTs

The year so far has been marked by a general decline in interest in NFTs as a category of digital assets. On a year-to-date, interest peaked around February, and NFT market capitalization and sales volume have since trended downward. 

According to NFTGo, the sum of the market capitalization of all collections has fallen by 46% in the past seven months. Also, the daily total volume of NFT sales across all collections has dropped by 98% within the same period. For context, this was $420.48 million on 19 February. As of 19 August, the sales volume recorded was less than $5 million. 

Amid the waning interest, the values of blue-chip NFTs have also been affected. For example, as of this writing, the floor price of an NFT from the Bored Ape Yacht Club [BAYC] collection stood at 24 ETH. The last time the average price was this low was in August 2021, three months after it launched. This year alone, the collection’s floor price has plummeted by 64%. 

Another leading blue-chip NFT collection affected by the whirlwind of disinterest in digital collectibles is CryptoPunks. At a floor price of 47.39 ETH, one CryptoPunk NFT currently trades at a price last recorded in June 2022. 

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OpenSea has reversed its policy on royalties for NFT artists by making creator fees optional, citing competition from rival marketplaces, including Blur, LooksRare, and Dew. The leading NFT marketplace announced earlier today that the changes would go into effect on August 31, 2023. Post this date, NFT artists who sell digital art on the platform will receive royalties on secondary sales only if the buyer chooses to pay it. 

OpenSea Operator Filter To Be Disabled 

In addition to making royalties optional, the OpenSea Operator Filter will also be shut down, the NFT marketplace stated in a blog post. Operator Filter, which was launched in November last year, is a tool used by NFT artists to restrict the sale of their collections to marketplaces that don’t enforce creator fees in secondary sales. 

The objective of the Operator Filter was to empower NFT creators by giving them control over their artwork and web3 business models. But OpenSea claimed that the tool required the participation of everyone in the web3 ecosystem, which did not happen, prompting the change in the royalty policy. 

According to OpenSea, the option creator fees would be more in line with the choice and ownership in the DeFi space. Starting August 31, the Operator Filter will not block any web3 marketplaces, making it easier for potential NFT buyers to identify secondary listings. This would include the creator’s preferred fees, as well as the option for buyers to modify the creator fees payment. 

However, for NFT creators who enable the OpenSea Operator Filter for their collection before August 31, the NFT marketplace will enforce the creator’s preferred royalty on all secondary sales till February 29, 2024. This option will also be extended to existing collections on all non-Ethereum blockchains.

The NFT community on X (formerly Twitter) expressed frustration with OpenSea’s decision to make creator fees optional. NFT artists questioned the incentive to stay with OpenSea instead of going to rival marketplaces like Blur. 

The post OpenSea Shuts Down Royalty Enforcement, Makes Creator Fees Optional appeared first on Cryptology IQ.

• Two U.S. lawmakers have written to Apple seeking info about App Store’s policy for crypto-related apps. 
• The lawmakers wrote to CEO Tim Cook expressing concerns about the restriction of emerging tech like blockchains and NFTs. 
• Representatives Gus Bilirakis and Jan Schakowsky want to determine App Store’s impact on American technological leadership. 

Tech giant Apple is facing a bipartisan inquiry regarding the App Store’s policies and guidelines regarding applications related to NFTs and the broader crypto space. Republican Congressman Gus Bilirakis and Democratic Congresswoman Jan Schakowsky penned a letter to CEO Tim Cook, seeking information about App Store’s restrictive crypto policy.

Apple’s Policies May Impact U.S Technological Leadership

In the letter to Apple CEO Tim Cook, Representative Gus Bilirakis and Jan Schakowsky who also serve as Chairman and Ranking Member of the Innovation, Data, and Commerce Subcommittee, questioned App Store’s guidelines, which according to them were potentially being used by the tech giant to restrict emerging technologies like blockchains. 

The lawmakers asked Cook to share documents pertaining to Apple’s policies for its iOS App Store, which they believe could be damaging the United States’ superiority in emerging technologies. They noted that the company’s support of blockchains, NFTs, and other distributed ledger technologies could benefit the country’s tech industry. 

The letter to Tim Cook included a list of questions for Apple, including inquiries about the company’s plans to develop apps using blockchain. The lawmakers also raised concerns about the tech firm’s attempt to use App Store policies to increase its revenue at the expense of crypto-related applications.

It is essential that Congress fully understand the App Store Guidelines and the extent these guidelines limit innovation and American technology leadership.”

Chairman Bilirakis and Ranking Member Schakowsky

The lawmakers gave Apple till August 14 to respond to their inquiry regarding App Store’s crypto policies. Coinbase’s Chief Legal Officer Paul Grewal recently took to Twitter to praise the bipartisan initiative by Bilirakis and Schakowsky. Kristin Smith, the Chief Executive of the crypto advocacy group Blockchain Association, also welcomed the lawmaker’s inquiry into App Store’s restrictive policies. 

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• Polygon partnered with web3 wallet Suku to launch an open edition NFT collection minted on Twitter. 
• The crypto community on Twitter minted more than 50,000 NFTs within 48 hours. 
• Suku leveraged Twitter for its user-centric approach to onboard newcomers into crypto. 

Polygon, the popular Ethereum layer 2 scaling solution, recently partnered with Web3 payment services firm Suku to launch an unprecedented open edition NFT collection that was entirely minted on Twitter. Users on Twitter minted more than 50,000 NFTs during the 48-hour mint window by making a tweet tagging Polygon and Suku. 

Suku Leveraged Polygon And Twitter To Simply Crypto Onboarding

The free NFT collection from Suku was announced to celebrate the launch of Polygon 2.0. The NFT campaign led to Suku getting more than 48,000 wallet downloads, the web3 payments firm stated in a press release. Suku and Polygon received over 88,000 social mentions, 18 million users reached, and over 22 million impressions through the free NFT collection.

For managing the NFTs minted on Twitter, Suku offered NFT holders its web3 wallet, which can be accessed with their Twitter account. According to Suku, by eliminating the complex onboarding process associated with NFTs and the broader crypto space, it promoted blockchain inclusivity. 

By integrating its tools with popular platforms like Twitter, where users already spend their time, Suku is pioneering a user-centric approach to blockchain technology.”

Suku team

Suku’s social web3 wallet also allows users to send and receive crypto instantly. Users who haven’t signed up for the wallet can access it by using their Twitter handle as a wallet address, essentially making it the crypto transfer service on Twitter. 

Suku stated that utilizing a fast and scalable blockchain like Polygon was a key element of its plan to foster crypto adoption and attract new users to the blockchain space, in addition to other incentives such as zero gas fees on minting NFTs and access to a web3 wallet that wouldn’t require seed phrases or private keys. The firm plans to expand to other social media platforms, including Face, Reddit, Instagram, and LinkedIn.

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• Google has rolled out native support for tokenized digital assets in apps and games on the play store. 
• The tech giant will allow developers to offer games and apps enabled with trading of NFTs. 
• Experts saw the latest policy change as a positive step for the crypto space. 
• Reddit partnered with Google to help update the play store’s policy for digital assets. 

Google has rolled out native support for tokenized digital assets like non-fungible tokens for apps and games on its play store. In a major policy overhaul, the tech giant will allow developers to offer games and apps that would allow users to buy and sell or earn tokenized assets. Google’s change in stance towards NFTs came as a positive sign for investors, artists, and other stakeholders in the space. 

Reddit Helped Google Update Its NFT Policy

Google stated in a recent blog post that the decision to update the policy on tokenized digital assets was taken in order to support developers that wanted to offer a creative and immersive in-app experience to users. Google Play’s policy was accordingly updated to allow the transaction of blockchain-based assets within the applications and games. The move is expected to boost user loyalty via NFT rewards and reimagine traditional games with unique user-owned content. 

Interestingly, social networking giant Reddit and game developer Mythical Games lent a helping hand to Google to overhaul the policy on NFTs in order to offer transparent and responsible engagement with blockchain-based digital content. The companies collaborated to set clear guidelines to promote the safe usage of blockchain technology. 

We think these new policies are steps forward for both players and developers alike and will positively impact the adoption of new technology while also protecting consumers.”

John Linden, CEO, Mythical Games

Joseph Mills, a product manager at Google Play, stated that developers who decide to incorporate tokenized digital assets like NFTs on their apps and games would be required to declare the blockchain elements. Furthermore, Google Play will not allow NFT-enabled apps and games that include trading or gambling activities. 

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Summary:

• A newly formed DAO in the Azuki community voted to hire a lawyer after last week’s Elementals launch.
• The DAO comprised of 74 members wants to recover 20,000 ETH from pseudonymous founder Zagabond and the blue-chip NFT project.
• Azuki’s community voiced heavy backlash against the Elementals NFTs with members saying they look strikingly similar to the original collection.

A newly formed DAO in the Azuki community – a popular Japanese manga-themed project –voted to hire a lawyer for the recovery of 20,000 ETH raised last week during the Elementals mint, a new NFT collection from Chiru Labs that holders say is similar to the original collection.

The snapshot proposal floated over the weekend by Azuki DAO was titled “Hire a Lawyer and Help the community reclaim the 20000ETH from Zagabond” and saw 37 votes out of 74 members that comprise the newly formed decentralized autonomous organization (DAO).

88.35% of voters backed recovering nearly $40 million in ETH raised by the Elementals and reallocating the proceeds to community incentives meant to support artists, creators, and builders.

Azuki Elementals Just Like Original Collections, Community Cries Out

Sunday’s vote follows intense community scrutiny surrounding the Elementals launch and claims that pieces from the new collection look almost exactly the same as NFTs from the original 10,000 profile picture (PFP) project that debuted in February 2022.

Elementals was released last week by Chiru Labs – the startup behind the Azuki project – and raised 20,000 ETH in 15 minutes. Each NFT from the new collection cost 2 ETH to mint worth roughly $3,900 at current market prices.

The hype was shortlived as community members raised concerns over similarities between the two collections, leading to sell-offs across NFT marketplaces. Azuki’s floor price – the cheapest available NFT on open markets – fell over 50% and now sits around 6 ETH.

Azuki DAO which says it is made of OG holders of the original project argued that the pseudonymous founder Zagabond let down the community and tried to pacify community members with “empathy checks and promises”.

We have max-minted the 2e elemental beanz and are anticipating the release of a new product, as suggested by the Asian ambassador. Despite our efforts, we have only been given a similar profile picture to that of the original Azuki holders, and nothing more. The Team is blatantly scamming us…

In other related news, the DAO governance token contract for BEANZ was exploited for around 35 ETH due to a signature vulnerability.

The post Azuki DAO Want Their Money Back After Controversial $40 Million Elementals Mint appeared first on Cryptology IQ.

• Three Arrows Capital’s (3AC) Grails Collection has been auctioned off by Sotheby’s for almost $2.5 million. 
• The NFTs that were sold included Tyler Hobbs’ Fidenza #725 CryptoPunk #1326 and Dmitri Cherniak’s Ringers #375.
• Fidenza #725 attracted the highest bid of over $1 million, exceeding the high estimate by nearly five times. 
• The NFTs sold in Grails Collection’s auction are separate from the NFT collection put together by 3AC’s Starry Night Capital. 

Auction house Sotheby’s has successfully auctioned off a series of rare NFTs associated with Three Arrows Capital (3AC). The popular Grails Collection, which was seized from the defunct crypto hedge fund last year, has been sold for almost $2.5 million. The auction comes three months after Three Arrows Capital’s liquidator announced its intention to sell a part of the firm’s massive digital art collection. 

3AC’s Fidenza #725 Rakes In Over $1 Million In Sotheby’s Auction

Sotheby’s Metaverse, the digital art subsidiary of the auction house, took to Twitter earlier today to announce that it had sold seven NFTs from 3AC’s Grails Collection. The auction was part of a multi-part sale announced by the defunct crypto hedge fund’s liquidator Teneo earlier this year. The most expensive NFT sold was Tyler Hobbs’ Fidenza #725 ($1.01 million), which attracted a bid five times its estimated price of $120,000-$180,000. 

The second highest bid was for Larva Labs’ Autoglyph #187, which raked in $571,500 despite having an estimated price of $120,000-$180,000. Other NFTs that were auctioned include Larva Labs’ Crypto Punk #1326, which sold for $165,000, Ringers #194 ($152,400), 0xDEAFBEEF’s Series 1: Angular – Token 134 ($241,300), Ringers #375 ($95,250) and Fidenza #861 ($241,300). Every piece of digital art from 3AC’s Grails Collection sold for considerably higher than the auction house’s estimate. 

“The emergence of this collections marks a significant opportunity for collectors to celebrate the pioneering generative artists who helped bring the form to this wider audience, and who continue to push for form forward.”

Michael Bouhanna, Sotheby’s Head of Digital Art and NFTs. 

Sotheby’s described the Grails Collection as some of the rarest and most important works from the most sought-after creators in the Digital Art markets. The auctioned NFTs are not part of the highly coveted NFT portfolio of 3AC’s Starry Night Capital. 

The post NFTs Seized From 3AC Fetch $2.5 Million At Sotheby’s Auction appeared first on Cryptology IQ.

• A trader splurged almost $1 million buying Bitcoin Inscription #5232025 amid growing debates about congestion on the BTC network.
• This particular BTC Inscription holds 50,000 ORDI coins, the native asset of Ordinals Protocol which was created by developer Casey Rodarmor.
• ORDI was introduced earlier this year using the BRC-20 standard after developer Rodarmor designed a protocol for embedding digital data like art on every satoshi and pseudonymous builder Domo unveiled a token format akin to ERC-20 on Ethereum.

A trader spent 35 BTC buying Bitcoin Inscription #5232025 amid growing debates about congestion on the BTC network due to BRC-20 memecoins and a surge in text-based NFTs issued on crypto’s largest blockchain.

The scoop cost over $960,000 in Bitcoin at current market prices, possibly the highest sale for an Inscription since the asset debuted earlier in January 2023. Since then over 5 million inscriptions have been minted on Bitcoin’s blockchain, a surge that BTC purists claim has drastically congested the network.

Dune Analytics data showed that over 4 million of these Bitcoin Inscriptions are text-based. Less than half a million contain visual digital data in png format or what some might consider NFT art. These Inscriptions are made possible by using the Ordinals ProtocoL developed and launched by Casey Rodarmor.

Ordinals as they are commonly called by crypto participants have also racked up a fortune in fees. Users have spent over $29 million in fees experimenting with ordinals and attaching data to satoshi, the smallest unit of Bitcoin.

Average Fees Skyrocket On Bitcoin Inscription Activity

The rise of Ordinals and a token standard akin to ERC-20 on Ethereum seems to have sparked a tussle over block space on Bitcoin’s network. Indeed, the increased demand on BTC’s blockchain led to an uptick in transaction fees. Fees on BTC hit over $20 on average, a two-year high per on-chain data.

Rising average fees and a flood of BRC-20 tokens have formed a crescendo around arguements for and against ordinals. On one side, BTC maxis like Michael Saylor – whose company holds billions in Bitcoin – insist that Ordinals will drive adoption.

BTC purists and some developers oppose the view, moving to sink NFTs and altcoins on BTC’s network.

The post Bitcoin Inscription With Ordinals Token Cache Scooped For Nearly $1 Million appeared first on Cryptology IQ.

• OpenSea’s former product manager Nate Chastain has been convicted of wire fraud and money laundering. 
• A federal jury in New York found Chastain guilty of using insider information to trade NFTs.
• The former executive faces up to 40 years in prison for netting $50,000 from his insider trading scheme. 

Nate Chastain, the former Product Manager at NFT marketplace OpenSea, has been convicted by a federal grand jury in New York in the first-ever NFT insider trading case. Chastain’s conviction comes less than two weeks after the first hearing in his case was held in the District Court for the Southern District of New York. 

Former OpenSea Executive Faces Up To 40 Years In Prison

According to a report by Reuters, the federal jury found Chastain guilty of money laundering and wire fraud for his role in the NFT insider trading scheme. He faces up to 40 years in prison. The charges were filed against him in June last year by the U.S. Attorney’s Office in Manhattan. As the head of product, Chastain was responsible for picking the digital artworks that would be featured on the NFT marketplace’s homepage.

Federal prosecutors accused the former OpenSea executive of abusing his position at the firm to illegally trade NFTs. He reportedly made more than $50,000 between June 2021 and September 2021 by purchasing NFTs that were about to be listed, and then offloading them after their prices surged. Chastain reportedly tried to cover his tracks by using multiple wallets and accounts to route his funds. 

Nathaniel Chastain exploited his advanced knowledge of which NFTs would be featured on OpenSea’s website to make profitable trades for himself. Although this case involved trades in novel crypto assets, there was nothing particularly innovative about his conduct — it was fraud.”

Damian Williams, U.S. Attorney SDNY

Nate Chastain’s guilty verdict comes more than six months after his lawyers filed a motion to get the case dismissed on procedural grounds. He pleaded not guilty as his lawyers argued that OpenSea did not treat the insider knowledge as confidential information during his tenure at the company. “Nobody told Nate that he couldn’t use or share that information,” the former executive’s lawyers stated during the closing arguments earlier this week. 

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