Is Insider Trading 'Common' in NFTs? (And is It Really Insider Trading?) (vice.com) 44
What happened after U.S. prosecutors indicted an NFT marketplace's product manager for insider trading? Vice reports:
The reaction among crypto investors was largely characterized by surprise, and an acknowledgement that trading on insider information (considered by some to be A-OK in private markets) is rampant in the space. "Bro they are prosecuting insider trading on NFTs. we're all fucked," said one pseudonymous user in reply to a tweet about the case by Steven Zheng, director of research at The Block. "This is pretty shocking. I can't imagine any NFT or DeFi developer doesn't somehow profit from insider trading," said another.
Of course, not every NFT investor sees this kind of activity as acceptable. Traders themselves first brought Chastain's activity to light in September using blockchain records. A pseudonymous NFT trader, who goes by Zuwu, pointed out those trades, which were easily traceable to Chastain's publicly-known Etheruem address.
Unlike Chastain, other NFT traders involved in potential insider trades are often too careful to leave traces. When they do, blockchain sleuths are quick to uncover those signs of unsavory behavior and call them out — a recent phenomenon that attempts to bring some justice to an otherwise permissive market.
As a result, that surprise move by the U.S. Department of Justice has NFT traders wondering what's on the horizon for this largely unregulated industry. "Insider trading is a pretty common problem in the NFT space, especially in the case of hyped-up NFT collections as lots of stuff on the market is being driven by FOMO," Fedor Linnik, an NFT trader and creator, told Motherboard.
The article also explores the question of whether the NFT marketplace falls under same restrictions as stock trading, with a professor of securities law calling it "somewhat misleading" to label this an "insider trading" case.
Even to call it a wire fraud case is a stretch, the professor tells them, adding "If it goes to a jury they will wonder why they should care whether someone traded jpegs ahead of them being moved around on a webpage."
Of course, not every NFT investor sees this kind of activity as acceptable. Traders themselves first brought Chastain's activity to light in September using blockchain records. A pseudonymous NFT trader, who goes by Zuwu, pointed out those trades, which were easily traceable to Chastain's publicly-known Etheruem address.
Unlike Chastain, other NFT traders involved in potential insider trades are often too careful to leave traces. When they do, blockchain sleuths are quick to uncover those signs of unsavory behavior and call them out — a recent phenomenon that attempts to bring some justice to an otherwise permissive market.
As a result, that surprise move by the U.S. Department of Justice has NFT traders wondering what's on the horizon for this largely unregulated industry. "Insider trading is a pretty common problem in the NFT space, especially in the case of hyped-up NFT collections as lots of stuff on the market is being driven by FOMO," Fedor Linnik, an NFT trader and creator, told Motherboard.
The article also explores the question of whether the NFT marketplace falls under same restrictions as stock trading, with a professor of securities law calling it "somewhat misleading" to label this an "insider trading" case.
Even to call it a wire fraud case is a stretch, the professor tells them, adding "If it goes to a jury they will wonder why they should care whether someone traded jpegs ahead of them being moved around on a webpage."
Is scamming a scammer scamming? (Score:5, Funny)
Asking for a friend.
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Not tolerating intolerance is not intolerant as far as I'm concerned.
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Late to the discussion, but https://en.wikipedia.org/wiki/... [wikipedia.org] is the obligatory link.
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Not quite: https://en.wikipedia.org/wiki/... [wikipedia.org]
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If you scammed a scamming scammer scamming scammed Chinese
Would the scamming scammer scam scamming scammed scammees?
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Yes. No actual mitigating factors on that. Now, baiting a scammer or wasting their time, that is something else. But as soon as you take money or other valuables from them by scam, you are a scammer yourself and just as criminal.
You're still dumb AF, h33t l4x0r! (Score:1)
Yup. [slashdot.org]
Fraud all the way down (Score:5, Insightful)
NFT insider trading is fraud wrapped in fraud covered in fraud sauce with a side of fraud.
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With apologies to Winston Churchill [thefreedictionary.com], I think you meant something like:
Re:Fraud all the way down (Score:5, Funny)
Well, there's fraud egg sausage and fraud, that's not got much fraud in it.
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Mod parent funnier.
Stupid people looking for stupid people. (Score:2)
Why are these people surprised that the law will eventually nab someone who is trying to fleece the public? Trading on insider information is basically a form of that. You are basically taking what is someone else's piece of the pie. Their loss, your gain, that they had no hope of doing anything about. Its a serious thing. The only surprising thing is that the nabbing doesn't happen more often.
And there is a little grey area, but not much. If you are a lead Elden Ring developer and you buy a bunch of
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It's the iron law of criminal justice: only the stupid get caught.
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Good thing that everything to do with NFTs is stupid then! Lots to catch! :D
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Someone told them that crypto was anonymous. It even kinda looks that way, in that it's normal for the people behind hundred million dollar NFT scams to use pseudonyms and operate out of a Discord server.
The scamming will continue (Score:2)
until bank accounts are empty [9cache.com].
It's a warning shot (Score:3)
We are seeing rampant centralization in cryptocurrencies. Specifically the combination of the exchanges and a large mining pools. The only reason why the government hasn't stepped in and regulated it all out of existence is that a handful of ultra wealthy investors want in on the action and have been staying the government's hand. But with the Democrat in the White House setting the tone for the department of Justice and also probably nervous about knock-on effects that crypto crashes can have on the economy at Large (in the last 15 months 1 billion dollars went missing the scams alone, that money is likely just gone from the economy in the hands of a few now very wealthy scammers).
So the crypto Bros have to pick their poison. Either the regulated out of existence by basic anti-money laundering and securities regulations or to get eaten alive by bigger fish. By the way it's a failed experiment.
NFT = Milking the Stupid Scheme (Score:5, Insightful)
And it's a very simple scheme:
1. Create a made-up crypto asset (currency, NFT, what have you)
2. Grab a fair portion of the assets yourself at an early stage at no cost.
3. Excite the market.
4. Make the igorant sheep buy your worthless piece of sh...
5. Sell your assets at the high.
6. Don't worry about any legal consequences because, you know, it's DeFi and there's no legal oversight from anyone.
7. Rinse and repeat.
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Are Crypto/NFT intrinsically corrupt? (Score:2)
An algorithm will not protect you from scammers.
OMG It's Full Of Stars (Score:2)
This is exactly like prosecuting "insider trading" of actual stars in the sky but as recorded in those "Name A Star After Someone" books.
The government is interested because big financial services corporations and banks want to get in on a cut of the action.
Speaking of stars, here's an insider tip for you. I have in my possession the high-precision geographic and time coordinates of where a famous movie star was standing on the street for over 20 seconds last week. These coordinates are available as NFTs, b
Insider? (Score:2)
On one side are the con-men on the other side the marks.
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stock sale
Because stocks are regulated. As is the release of 'material information' to the public by company officers. As a result, insider trading is a well defined legal concept.
Some other markets are also regulated to enforce the equitable disclosure of information that may affect asset prices. Real estate is an example. But here too, the concept is clearly defined in laws and regulations. Aside from this, the rule is "let the buyer beware".
We could establish an MEC (Monkey Exchange Commission) to solve these pr
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Commodities have their own rules.
Even if Regulation 180.1 didn't exist though, either the employees were defrauding their employer by undermining their business model or Opensea was defrauding it's customers by betraying common sense obligations. It's just plain fraud and the law doesn't have to be super-specific to punish fraud.
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Are NFTs commodities?
either the employees were defrauding their employer
Civil case based upon the employees terms of employment.
Opensea was defrauding it's customers by betraying common sense obligations
Only if the sales agreements included a clause about the use of common sense. I suppose such fraud could be prosecuted under consumer protection law. Run that by the traders on Wall Street and see how they'd like to be included in that jurisdiction.
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I think it's a bit of a stretch to say this professor even knows what ethics are.
I'm sure it happens with fine art (Score:1)
You're still a retard! (Score:1)
Yup. [slashdot.org]
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Wash trades happen all the time with art.
There are collectors that basically ensure that no artwork by their favorite artist will sell cheap - even if it means they'll overpay for the piece.
There are way too many examples of it happening. Take Andy Warhol paintings - it happens - if you want to sell it, you know those people who own significant holdings are going to ensure it stays
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Just that you don't have a full understanding of how this particular market works...
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Sorry mate, I didn't mean to imply
Of course you did, because you're a condescending asshole.
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Spending money to make money. That's exactly how wash trading works.
I'll break down the simple math so you can follow along.
I have a few pieces of art, and let's say that we need to pay the 10% per sale fee you described for these pieces of art.
I "invest" in selling myself one of those pieces by putting it up for sale at a ridiculous price of X, and spend 10% of X buying it back through an intermediary (with NFTs this is super trivial, I just need to make an account to sell from and another account to buy w
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Is NFT trading still a thing? (Score:2)
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For money laundering, you bet. The latest scam to get rich quick.
Why focus on NFTs? (Score:3)
Some of the traders of large financial institutions seem to be able to reliably predict the future: very, very reliably.
Doesn't anyone (SEC) look at trading patterns to determine an unrealistically successful trader?
They never proved too much about Martha Stewart except for the fact that there was a phone call at a crucial moment.
That was enough to convict.
Surely a wealth of unrealistically successful trades would be at least as much proof?