Beleaguered NFT marketplace provider OpenSea is laying off 20% of its employees, co-founder and CEO Devin Finzer said.
The layoffs were inevitable due to the so-called "crypto winter" and "macroeconomic instability" of the economy, Finzer said in a tweet.
"The folks leaving us are smart, hardworking, mission-driven individuals who’ve played an immeasurable role in growing OpenSea and the NFT space to where we are today," he tweeted. "We will miss them and they will forever be part of our story and community."
Affected employees will receive an undisclosed amount of severance, and health insurance coverage into 2023, Finzer said. He also commented on the slowdown in the economy, stating, "when the global economy is uncertain, our mission to build a foundational layer for new, peer-to-peer economies feels more urgent and important than ever."
OpenSea was once deemed the leading marketplace for non-fungible tokens, or NFTs, which are a method of asserting ownership over a piece of online content such as a photo or digital artwork.
Despite the layoffs, Finzer projected a positive outlook for the industry, stating the future of the NFT marketplace has the potential for more innovation, he tweeted.
"I have immense conviction in the NFT space & in OpenSea’s role in it. During this winter, we’ll see an explosion in innovation across the ecosystem. And with the changes we’ve made, we’re in a strong position to continue driving the space forward."
OpenSea Faced Numerous Problems
OpenSea has been beset by many issues, including being hacked on its main Discord channel in May.
The hackers had posted a notice of a fake YouTube partnership announcement that was actually a link to a phishing site.
OpenSea said in a statement that "an attacker was able to post malicious links in several of our Discord channels. We noticed the malicious links soon after they were posted and took immediate steps to remedy the situation, including removing the malicious bots and accounts. We also alerted our community via our Twitter support channel to not click any links in our Discord."
The company said a preliminary investigation indicated the attack had "limited impact" to its users.
But in June, the company said users should expect to run into phishing scams because it had been the victim of a security breach.
An employee of email delivery vendor Customer.io downloaded and shared email addresses of OpenSea users.
“If you have shared your email with OpenSea in the past, you should assume you were impacted,” the company said.
A former employee of OpenSea was arrested and charged with federal wire fraud and money laundering due to insider trading of NFTs in June. Each charge carries a maximum sentence of 20 years in prison.
Nathaniel Chastain, a former OpenSea product manager, used the confidential information he received to purchase dozens of NFTs that he knew would be featured on the platform. He sold them at a profit, the U.S. Attorney's Office for the Southern District of New York statement said.
The FBI alleges that he purchased the NFTs before they were listed and sometimes "sold them at profits of two- to five-times his initial purchase price."
"From at least in or about June 2021 to at least in or about September 2021, Chastain used OpenSea’s confidential business information about what NFTs were going to be featured on its homepage to secretly purchase dozens of NFTs shortly before they were featured," prosecutors alleged.
Chastain used anonymous digital currency wallets and anonymous accounts on OpenSea to make the purchases, according to the FBI.
It marked the first time the Department of Justice has targeted people for insider trading of NFTs.
“In this case, as alleged, Chastain launched an age-old scheme to commit insider trading by using his knowledge of confidential information to purchase dozens of NFTs in advance of them being featured on OpenSea’s homepage," FBI assistant director-in-charge Michael J. Driscoll said. "With the emergence of any new investment tool, such as blockchain-supported non-fungible tokens, there are those who will exploit vulnerabilities for their own gain.”
