I hope you are all well and having excellent day, welcome to CryptoGod-1’s blog on all things crypto. There have been many scandals associated with the NFT market, including plenty of insider trading claims, and the most recent accusations are now pointing towards the Ethereum NFT collection Moonbirds after a recent surge in price and trading volume.
Moonbirds
Both prices and trading volume for the Ethereum NFT collection Moonbirds saw a significant surge on Friday the 16th of February 2024. This came following an announcement of Yuga Labs’ acquisition of the collection’s intellectual property alongside creator Proof. While that is a normal mode of business, the issues have arisen from the considerable spikes in sales activity in the days leading up to the announcement. This has sparked speculation of potential insider trading.
Moonbirds had been launched back in April 2022, when Proof launched its flagship profile picture collection. This consisted of 10,000 unique, pixelated owls wearing witch hats, monocles, and astronaut helmets and was known as Moonbirds. A week after launch the NFTs were trading at over $100,000 each on average while one sold for $1 million. Once the market began to crash then things slowed and the NFTs sales fell by over 80% year-over-year in January 2023. Moonbirds had lost 95% of its value from peak prices and almost 50% of its holdings were lost when Silicon Valley Bank collapsed.
The blockchain analytics platform CryptoSlam noted that the daily sales volume for Moonbirds NFTs remained below the $100,000 mark for each day throughout this month until the 13th of February, barring on the 4th when it totalled approximately $141,000. On the 14th of February 2024 the daily sales volume skyrocketed fivefold to about $460,000 which was accompanied by almost four times the number of transactions seen previously. These elevated sales volumes continued on the 15th, with roughly $333,000 of sales volume.
Once the announcement was made on the 16th of February the sales figured soared even higher, with the current daily tally at approximately $3.1 million. Data from OPENSEA shows the spike in volume on the 16th after the climb in sales began earlier in the week. The projects floor price saw a similar spike in the days leading up to Friday's announcement. The floor price sits at 1.95 ETH currently compared to the 1.15 ETH on the 12th of February 2024.
The rise in price of an asset following an announcement of this nature is not surprising, however the surge prior to the announcement raises suspicions of potential insider trading. Many influencers, developers, and community members took to Crypto Twitter on Friday to highlight this possibility. The pseudonymous blockchain developer cygaar tweeted that a sales/price chart for the week, which highlighted the spike on Wednesday, was a clear indication of insider trading.
Another well-known pseudonymous crypto trader and influencer, Cirrus, made a joke which referred to a wallet that had purchased over 150 NFTs from the Proof ecosystem in the past few days as “Nancy Pelosi’s wallet.” This is also another clear joke in terms of insider trading as there have often been multiple accusations of the U.S. Representative and former Speaker of the House trading stocks based on insider knowledge.
In 2023 Nathaniel Chastain, former Head of Product at OpenSea, was arrested and charged with wire fraud and money laundering in connection with insider trading in NFTs. At that time the prosecutors in New York’s Southern District accused the 31-year-old of “using confidential information about what NFTs were going to be featured on OpenSea’s homepage for his personal financial gain.” Chastain earned over $50,000 by trading at least 45 NFTs which he knew were going to be featured on OpenSea's homepage. For his crimes Chastain was sentenced to three months in prison for profiting tens of thousands of dollars through insider trading.
Have a great day.
CryptoGod-1.
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