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<ul><li> The world’s largest platform selling non-fungible tokens (NFTs), <keyword id="11928103" type="General" weightage="20" keywordseo="opensea" source="Orion">OpenSea</keyword>, admitted to one of its employees committing <keyword id="6360088" type="General" weightage="20" keywordseo="insider-trading" source="Orion">insider trading</keyword> after accusations came to light on Twitter. </li><li>Artist Tyler Hobbs, the brains behind the <keyword id="377688" type="General" weightage="20" keywordseo="fidenza" source="Orion">Fidenza</keyword> <keyword id="4668945" type="General" weightage="20" keywordseo="nft" source="Orion">NFT</keyword> series, has accused SolBlocks of copying his work without giving him credit.</li><li>And, just last month a <keyword id="12107992" type="General" weightage="20" keywordseo="fake-nft" source="Orion">fake NFT</keyword> claiming to be artwork by graffiti artist <keyword id="1058263" type="General" weightage="20" keywordseo="banksy" source="Orion">Banksy</keyword> was sold for $336,000.</li><li>These instances highlight how NFT platforms allow artists to list their NFTs without as many checks and balances as in the real world — a gaping hole in regulation that needs to be fixed.</li></ul>Non-fungible token (NFT) platforms and trades have grown fast over the past year. While platforms like DAppsRadar have <a href="https://dappradar.com/nft/marketplaces">shown</a> slight slowdowns in recent months, year-over-year trading has risen. But despite the breakout success of many platforms, the <a href="https://wazirx.com/signup?invite=2kpah6gr&amp;utm_source=business-insider&amp;utm_medium=referral&amp;utm_campaign=article-editorial">NFT</a> space is neither regulated nor does it have a lot of checks and balances right now, which is causing a bit of trouble. The most recent incident is of the world’s largest NFT marketplace, <a href="https://opensea.io/blog/announcements/employee-information-use-at-opensea/">Open Sea</a>, which does over $100 million in trading volumes, admitting to insider trading. One of its senior employees used privileged information to buy NFTs that would be displayed prominently on its platform. <div type="ExtQuote" text="“This is incredibly disappointing. We want to be clear that this behavior does not represent our values as a team.”" auname="Statement by OpenSea on incident of insider trading"></div> However, the OpenSea case isn’t the first time an instance of fraud has been seen on the NFT space. Tyler Hobbs, an artist who designed the popular <a href="https://wazirx.com/signup?invite=2kpah6gr&amp;utm_source=business-insider&amp;utm_medium=referral&amp;utm_campaign=article-editorial">NFT series</a> called Fidenza <a href="https://cointelegraph.com/news/fidenza-artist-slams-knock-off-nft-project-from-honest-pirates-on-solana">called out</a> a platform called SolBlocks for copying code from his work. Earlier this month, NFT collector Pranksky was tricked into buying a fake Banksy NFT. As far back as March, there were reports of people impersonating others in order to sell NFTs on platforms like Rarible — like illustrator Derek Laufman. <div type="twitter" handle="laufman" handlename="Derek Laufman" image="http://pbs.twimg.com/profile_images/1359231015693275141/iwQxvTzO_normal.jpg" favoritecount="91" retweetcount="19" status="This is 100% NOT me. I thought the point of NFT was that the artwork and artists needed to be verified? Apparently… https://t.co/ndkUs9y2K4" createdat="1615639046000" id="1370715624058544128"></div> <cmsannotation type="cmsannotation" annotationid="It doesn’t get more mainstream than insider trading" comment="subhead" text="It doesn’t get more mainstream than insider trading">It doesn’t get more mainstream than insider trading</cmsannotation> Nate Chastain, who was OpenSea’s head of product, was accused by <a href="https://twitter.com/Sol_blocks/status/1437926338875244544?s=20">Twitter</a> users of using secret Ethereum wallets to buy NFTs on the platform before they were listed for the public. OpenSea — worth $1.5 billion — did not name the employee in their acknowledgement, but did admit to the fact the insider trading had taken place. <div type="twitter" handle="ZuwuTV" handlename="Zuwu🟩 👻🎃🦇" image="http://pbs.twimg.com/profile_images/1436768692629614598/UfwN0klp_normal.jpg" favoritecount="11607" retweetcount="2810" status="Hey @opensea why does it appear @natechastain has a few secret wallets that appears to buy your front page drops be… https://t.co/7riFTm1MM2" createdat="1631662119000" id="1437921263394115584"></div> According to 8BTCNews, a Chinese blockchain news outlet, Chastain and his scheme clocked in a profit of 18.875 Ether — worth around $68,000 as per the price of Ether on September 16 at 2:00 pm Indian Standard Time (IST). To the platform’s credit, which hit new highs in August after docking transaction volumes worth <a href="https://www.businessinsider.in/cryptocurrency/news/nft-traders-sank-3-billion-into-digital-art-in-august-as-interest-spikes/articleshow/85883410.cms">$3.4 billion</a>, it responded and admitted the theft in less than 24 hours. It has decided to implement two new employee policies, including one which forbids team members from buying and selling NFs while they are being promoted by the company. <div type="ExtQuote" text="“We are taking this very seriously and are conducting an immediate and thorough third party review of this incident so that we have a full understanding of the facts and additional steps we need to take.”" auname="Statement by OpenSea"></div> Even so, this highlights the need for more stringent controls, not just at OpenSea, but for NFT platforms across the crypto ecosystem. Without any legal precedent, a case of insider trading such as this is not technically illegal. <cmsannotation type="cmsannotation" annotationid="The Fidenza episode" comment="subhead" text="The Fidenza episode">The Fidenza episode</cmsannotation> Hobbs, the ‘artist who paints with code’, wasn’t happy to find out that his code was being used to create art on SolBlocks, without giving him any credit. While SolBlocks admitted to copying the code — which is essentially the core IP of the artist’s work. — the company maintains that the NFTs in question are not copies of his Fidenza collection,which consists of 999 unique pieces. One of the NFTs sold in August for a whopping <a href="https://hypebeast.com/2021/8/art-blocks-fidenza-nft-1400-to-3-million-ethereum">$3.3 million</a>. <div type="twitter" handle="Sol_blocks" handlename="SolBlocks" image="http://pbs.twimg.com/profile_images/1437432242343645191/mte3vcII_normal.jpg" favoritecount="11" retweetcount="2" status="3/ Each and every SolBlocks Series I (Fidenza) is a completely new, unique, algorithmically-generated piece of art… https://t.co/oupq6UShF1" createdat="1631663329000" id="1437926340955627526"></div> The incident shows yet another way in which fraud can happen via NFTs. Creators have often appreciated the fact that NFTs allow them to earn commissions on future sales, but if the core code is stolen, it also would leave them vulnerable. <cmsannotation type="cmsannotation" annotationid="Fake NFTs" comment="subhead" text="Fake NFTs">Fake NFTs</cmsannotation> While the crypto and blockchain industry promises security and accountability, there have also been cases of fake NFTs being sold. Pranksky followed a link someone shared on chat platform Discord and bought an NFT that seemed to be officially posted by the anonymous street artist himself — but was a fake. BBC <a href="https://www.bbc.com/news/technology-58399338">reported</a> that the hacker returned the $336,000 to Pranksky eventually, but the collector still lost the $5000 he paid in transaction fees. Traditional auction houses and systems have verification systems for high profile sales, while trading platforms usually have rules to avoid insider trading. For instance, a piece of physical art sold through Sotheby’s has to go through a series of verifications to verify its authenticity. On the other hand, many blockchain platforms allow almost anyone to mint their own NFTs on their platforms. The idea being that only those who create quality content will make money. But in the rush to increase volumes, such instances can happen. To be clear, such regulations are being worked on too. The Indian government is looking to include NFTs in its <a href="https://economictimes.indiatimes.com/tech/technology/govt-looking-to-paint-nft-picture-in-crypto-bill/articleshow/86100183.cms">upcoming</a> crypto bill, while the European Union has also <a href="https://www.skadden.com/insights/publications/2021/06/regulatory-approaches-to-nonfungible-tokens">looked</a> to regulate these marketplaces. <a href="https://forum.businessinsider.in/">For a more in-depth discussion, come on over to Business Insider Cryptosphere</a> — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve. SEE ALSO: <a href="https://www.businessinsider.in/cryptocurrency">From CryptoPunks to trading pets on the blockchain -- how well do you know your NFTs? Take this quiz to find out</a> <a href="https://www.businessinsider.in/cryptocurrency/news/solana-continues-to-plummet-as-bitcoin-ethereum-and-others-rise-with-the-market/slidelist/86255080.cms">Solana continues to plummet as Bitcoin, Ethereum and others rise with the market</a> <a href="https://www.businessinsider.in/cryptocurrency">Bitcoin mining isn't just consuming energy, it's also generating 272 grams of e-waste with every transaction</a>

Insider trading, IP theft, fake art and fake profiles — Scammers are taking advantage of NFT platforms’ lack of regulation

Welcome to <keyword id="11937554" type="UNKNOWN" weightage="60" keywordseo="10-things" source="Orion">10 Things</keyword> Before the Opening Bell.If this was forwarded to you, <a href="https://newsletter.businessinsider.com/join/4np/10-things-opening-bell">sign up here.</a> Plus, download Insider's app for news on the go – <a href="https://apps.apple.com/app/apple-store/id554260576?pt=385758&amp;ct=06292021_newsletters&amp;mt=8">click here for iOS</a> and<a href="https://play.google.com/store/apps/details?id=com.freerange360.mpp.businessinsider"> here for Android</a>.Let's jump in. 1. Experts sound off on the metaverse as the virtual land rush heats up. Swelling valuations of virtual plots of land reflect big plans for the metaverse, and one exec <a href="https://markets.businessinsider.com/news/currencies/metaverse-land-sales-valuations-republic-realm-metaverse-group-crypto-2021-12">likened it to "buying on 5th Avenue back in the 1800s."</a> <a href="https://markets.businessinsider.com/news/currencies/cryptocurrency-predictions-2022-metaverse-nft-bitcoin-ether-gaming-cbdc-hack-2021-12">Experts have major predictions for the sector.</a> The CEO of crypto startup Meow says a major company could declare their official headquarters to be on a metaverse. The chief revenue officer of a DeFi platform predicts most people will operate day-to-day jobs partially in the metaverse.A co-founder of The Sandbox — a blockchain-based decentralized metaverse — told Insider <a href="https://markets.businessinsider.com/news/stocks/metaverse-the-sandbox-virtual-world-land-sales-decentraland-nfts-crypto-2021-12">the metaverse will usher in a whole new economy</a>, driven by huge property transactions. The "sand" cryptocurrency used on the platform is up 9,000% on the year.Here's a few of the recent splashes from across the virtual world:<ul><li>The priciest land deal so far is Republic Realm's <a href="https://markets.businessinsider.com/news/currencies/metaverse-property-sandbox-virtual-real-estate-deal-record-4-million-2021-11?utm_medium=ingest&amp;utm_source=markets">$4.3 million purchase in The Sandbox metaverse last month</a>.</li><li>A music service whose crypto token has shot up 932% this year <a href="https://markets.businessinsider.com/news/currencies/audius-nft-radio-station-token-defi-gaming-music-streaming-service-2021-12">is putting an FM radio tower on a DeFi gaming platform</a>.</li><li>Ubisoft launched in-game NFTs — <a href="https://markets.businessinsider.com/news/currencies/ubisoft-nfts-video-game-major-company-tom-clancy-ghost-recon-2021-12">the first playable, energy-efficient NFTs in a game produced by a major developer</a></li></ul>2. Stocks are upbeat as focus turns to the Fed in a week of central bank meetings. Investors expect Powell &amp; Co. to bring in a faster pace of tapering Wednesday, to lead out a policy decisions from Europe, the UK and Japan. <a href="https://markets.businessinsider.com/news/stocks/stock-market-today-fed-reserve-december-policy-decision-inflation-omicron-2021-12">Here are the latest moves on the market</a>.3. Tyler Hobbs' Fidenza NFT collection notched over $177 million in secondary sales from buyers, including Snoop Dogg. The former software engineer turned generative artist employs algorithms to create his masterpieces for the blockchain. <a href="https://www.businessinsider.com/crypto-ethereum-how-to-make-nft-art-fidenza-tyler-hobbs-2021-12">He broke down his creation process, and shared how he values his artwork.</a>4. On the docket: Claros Mortgage Trust, Toell Co, and Fit Inc, all <a href="https://markets.businessinsider.com/earnings-calendar">reporting.</a>5. A dot-com style unwind of big tech stocks will follow a Fed rate hike, according to Bank of America. BofA's Michael Hartnett expects interest rates to rise by 0.50% in March 2022, ahead of consensus — <a href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sell-dot-com-bubble-unwind-rate-hikes-2021-12">the bank warned investors should sell now before the looming crash.</a>6. Crypto firms have reportedly spent $5 million lobbying US legislators in the first three quarters of 2021. The lobbying blitz, per the Economist, has arrived ahead of potential regulations for the cryptocurrency market, <a href="https://markets.businessinsider.com/news/currencies/crypto-companies-lobbying-congress-regulation-cryptocurrency-2021-12">which now has a market valuation of over $2.2 trillion.</a>7. Young investors are putting their portfolio performance over their well-being. A new survey found that millennial and Gen Z investors will make risky investments even if it takes a toll on their mental health. <a href="https://markets.businessinsider.com/news/stocks/gen-z-millennial-investors-risk-tolerance-stocks-retail-traders-covid-2021-12">Here's what experts had to say about the study.</a>8. Forget gift cards — consider buying someone a unique piece of digital art. An NFT could be both valuable and sentimental, said Kosala Hemachandra, the cofounder of MyEtherWaller. <a href="https://markets.businessinsider.com/news/currencies/how-to-give-someone-an-nft-crypto-for-holidays-christmas-2021-12">Here's how to buy someone an NFT this holiday season. </a>9. JPMorgan <keyword id="11893875" type="UNKNOWN" weightage="100" keywordseo="markets" source="Orion">markets</keyword> guru Marko Kolanovic shared his 20 global ideas for investors to maximize returns in 2022. The firm's quant-research chief remains bullish on stocks going into the new year, especially those outside the US. Kolanovic shared why he expects a "risk on" year — <a href="https://www.businessinsider.com/stocks-to-buy-investing-strategy-jpmorgan-jpm-marko-kolanovic-quant-2021-12">and why he thinks "pandemic winners" will fade. </a>10. A former top trading Citigroup exec explained why he left Wall Street to start his own crypto firm. Having already raised $1.5 billion for his crypto venture, Matt Zhang is seeking to build a "start-t0-finish-capital solution." He explained what sets his firm apart from others <a href="https://www.businessinsider.com/crypto-investing-strategies-citigroup-trading-executive-gamefi-staking-hivemind-capital-2021-12">and broke down the four strategies his firm will pursue.</a>Compiled by Phil Rosen. Feedback? Email <a href="mailto:prosen@insider.com">prosen@insider.com</a> or tweet <a href="https://twitter.com/philrosenn">@philrosenn</a>.Sign up for <a href="https://www.businessinsider.com/subscription/newsletter">more Insider newsletters here</a>.

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Insider trading, IP theft, fake art and fake profiles — Scammers are taking advantage of NFT platforms’ lack of regulation

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