Rumors of insider trading at NFT marketplace OpenSea are true, according to a statement from the startup, which was recently valued at $1.5 billion.

“Yesterday we learned that one of our employees purchased items that they knew were set to display on our front page before they appeared there publicly,” the company wrote in a blog post on Wednesday.

Although the name of the employee was not revealed, OpenSea’s Head of Product, Nate Chastain was accused Tuesday night by @ZuwuTV that he used secret crypto wallets in order to run sales on the platform.

In a series of posts which have since gone viral, the Twitter user traced transaction receipts via the public blockchain, allegedly showing that Chastain would buy an NFT just before OpenSea featured the piece on the front page of its website, and then sell it after it jumped in price following the buzz of its main page listing.

According to the company, they called it “incredibly disappointing” in a written statement. They also stated that they were “conducting a thorough and immediate review.”

OpenSea refused to confirm the identity of the employee for CNBC, but they said that they will “update everybody eventually” after their internal investigation has been completed.

Chastain’s public LinkedIn account is listed now as “unavailable.”

Chinese blockchain and crypto news platform 8btc traced the sales allegedly tied to Chastain and his front-running scheme, noting a collective profit of 18.875 ether, or about $67,000 at today’s price. CNBC could not confirm the figure and OpenSea said it would not reveal how much the employee made from the scheme.

OpenSea logged a record $3.4 billion in transaction volume last month, according to Dune Analytics. OpenSea has been able to trade billions of dollars in ether on its platform. However, it seems that the startup was not strict enough about restrictions regarding employees who use privileged information for NFT investments. This is beginning to change, however.

It stated that the company has adopted two new policies for employees, which prohibit OpenSea members from selling or buying from creators and collections, while the team is being promoted. Additionally, staff are prohibited from “using confidential data to buy or sell NFTs (whether they’re available on OpenSea or not). 

It is clear that there are regulatory gaps in large parts of the larger crypto ecosystem. NFTs are a particular example of a grey area. These NFTs are not considered securities and there is no legal precedent for digital assets in general. Therefore, insider trading involving NFTs doesn’t seem to be illegal.

London-based fintech data analyst Boaz Sobrado says the OpenSea scandal makes two things clear: the transparency of the blockchain makes it a powerful tool to monitor nefarious behavior, given that all trades are public and recorded forever – and crucially, that “regulators aren’t doing much” with that information.

While there is much talk about regulation now, what many bad actors do right now is clearly illegal. Sobrado stated that regulators don’t require their power to fight this type of fraud or misleading statements.

Sobrado continued, “I believe that regulators aren’t having their eyes on the prize” and almost everyone is able to get away with it.

Ultimately, Sobrado thinks this shows that money has gotten so loose and the scams have gotten so brazen that the people participating in them are neglecting the simplest steps to cover their tracks.

This is yet another sign of the maniacal nature of this sector. He said that while the going is great and people feel rich, the truth is not as well known. However, once the market starts to fall, many of these people will be exposed, and people will become angry.