In April, on an overcast spring afternoon, I attended the seventh iteration of NFT.NYC, a haven for all believers in monkey JPEGs with a price tag and another NFTs. As rain pelted the Javits Center, the “Super Bowl of NFTs” felt abandoned.
“The amount of people here is definitely reduced from last year,” Ric Johnson, who was promoting an NFT that let people vote on whether Donald Trump should go to prison, politely told me. large Mac, an attendee who only gave me his online pseudonym (crypto has a strong culture of anonymity), said that alternatively of the NFT “Super Bowl,” the conference felt more like the “preseason.” And Tom Smith, who was manning a booth that hawked NFTs of anthropomorphized cannabis plants, was even more direct: “It seems truly freakin’ dead.”
OpenSea, arguably the best-known company in the industry, was 1 of the conference’s sponsors, but Devin Finzer, the 33-year-old cofounder and current CEO, was nowhere to be seen. Alex Atallah, the cofounder of OpenSea who has since distanced himself from the startup, did appear on the main phase during 1 of the first sessions, only he didn’t want to talk about the very technology that made him and Finzer on-paper billionaires twice over. Instead, he mostly spoke about AI.
Cryptocurrency values may be back up, but 1 hyped storyline from the last crypto craze hasn’t recovered: the NFT. In January 2022, the full monthly sales volume for the asset class peaked at more than $6 billion, per CryptoSlam. Now, it’s below $430 million as of July. NFTs are hanging on, but they’re in troubled waters. “My mom thinks I’m a scam artist,” I overheard 1 conference attendee say.
At OpenSea, erstwhile the largest marketplace for NFTs, more storms have gathered. 1 of the most valuable private startups to come out of the incubator Y Combinator is now facing pending litigation from the Securities and Exchange Commission, a previously unreported “matter” with the national Trade Commission, inbounds from US and global taxation authorities, heightened competition, accusations of sex discrimination, and worker attrition.
Interviews with 18 current and erstwhile employees, as well as interior company papers and conversations with investors, artists, and another stakeholders in the NFT industry, illustrate how a startup inspired by cat JPEGs has morphed into what 1 erstwhile staffer called a “lite” version of Meta that seems lost between the cultures of large Tech and crypto.
Finzer erstwhile pitched OpenSea as a port of entry to a vast fresh internet. But now that the NFT advanced tide has receded, that pitch seems shallow.
In 2017, Finzer, then in his mid-20s, teamed up with Atallah, a Stanford postgraduate and another 20-something in the tech industry, to launch a startup. Originally, Finzer and Atallah planned to pay people to share their Wi-Fi with strangers with cryptocurrency, and in January 2018, they won entry into Y Combinator, the famed incubator that has produced tech behemoths like Airbnb.
That was besides erstwhile blockchains, or decentralized databases that no 1 individual controls, saw another wave of hype, and developers were popularizing a fresh way of permanently storing data onto said blockchains. These tokens were “non-fungible,” meaning they weren’t all the same, like a Bitcoin. In another words, NFT holders could brag they were the true owners of a single cartoon ape, according to an entry in an unchangeable database.
Industry boosters say the tokens can represent beautiful much anything: housing deeds; patents; contracts; rights to virtual real estate. But in late 2017, a company called Dapper Labs popularized a usage that appealed to the layperson: CryptoKitties, a game where users can buy and sale cartoons of cats on Ethereum, 1 of the most popular blockchains.
Cats weren’t the only JPEGs flying across what any proclaim is the next iteration of the internet. There were besides CryptoPunks, pixelated pictures of characters wearing mohawks and sunglasses; digital trading cards inspired by Pepe the Frog, a meme with its own winding (and, at times, racist) history; and EtherTulips, or virtual tulips that, ahem, fight each other.
Finzer and Atallah noticed the hype and decided to pivot. “They were very ambitious,” John Caraballo, a contractor they hired for 3 months to compose any of the first code for OpenSea’s website, told me. “What they were building was very cutting edge, and nobody had done it before.”
In May, after they graduated from a Y Combinator class that included projects like weed-infused soda and VR-based psychotherapy, Finzer and Atallah announced $2 million in funds raised for their NFT marketplace — with backing from established investors like Peter Thiel’s Founders Fund.
“Entire economies will appear that look very different than even our wildest imaginations — and we want to aid enable them,” wrote Finzer in a blog post announcing the raise. “Things are just starting to get exciting…”
For almost 3 years, the NFT manufacture was not exciting. OpenSea only had a fewer 100 regular traders utilizing its platform throughout 2020, per data from DappRadar, and little than 10 employees, according to a erstwhile employee.
(Joshua Galper, a spokesperson for OpenSea, said tens of thousands of people per week utilized OpenSea’s website in mid-2020.)
“Their full life was OpenSea,” the same worker told me of another squad members, including Finzer and Atallah. “It [was] truly fun, but besides very rigorous, very intense.”
Then, in March 2021, the NFT marketplace heated up. Mike Winkelmann, the artist better known as Beeple, auctioned off an NFT worth $69 million, and OpenSea saw the value of NFTs sold on its platform more than triple from the period prior, per DappRadar.
OpenSea can take up to a 10 percent cut from all sale, and the increased gross led to increased investor appetite. That same month, Finzer announced that OpenSea had raised $23 million at a $123 million valuation from funders, including venture capital titan Andreessen Horowitz. OpenSea was more applicable than ever, and the company started expanding. “It was just quite a few craziness,” 1 erstwhile worker told me. “And we were all wearing quite a few hats.”
The NFTs kept coming. After the mammoth sale of Beeple’s artwork, a company called Yuga Labs released Bored Ape Yacht Club, a collection of 10,000 cartoon apes whose holders were promised exclusive events, perks, and products. People were paying millions for the rights to say they were the actual owners of, say, an ape with golden fur or 1 with heart-shaped sunglasses. “When I first saw Bored Apes, I was like, ‘What the fuck is that?’” said 1 erstwhile employee. “And then seeing how much people were paying for that — it was just insane.”
As more images of apes, punks, cats, and penguins changed hands, OpenSea collected more fees. gross skyrocketed from $9 million in the second 4th of 2021 to $167 million in Q3 and $186 million in Q4, according to an interior company document. “It was a truly fun period,” said another employee. “The minute you put out a feature, so many people would talk about it.”
Suddenly, Finzer and Atallah’s marketplace was generating meaningful amounts of cash, and investors were frothing at the mouth. In July, the startup landed yet another backing round, drumming up $100 million at a $1.5 billion valuation. “The celebrities coming out of the woodwork, the cash grabs, [they were] just truly exciting,” said 1 erstwhile employee. “People I haven’t talked to for years were emailing me… Everybody saw a chance to become filthy rich.”
But with more money came more problems. “Every stressful thing felt like the biggest deal in the world,” Finzer told employees in 2023 about the early days of the company.
In September 2021, OpenSea asked Nate Chastain, the startup’s head of product, to resign after any manufacture watchers discovered that he was trading NFTs with insider information. Chastain’s strategy was simple. all fewer days, OpenSea would advance fresh collections on its homepage. Given that the marketplace was the de facto locale to buy and sale NFTs, the tokens inevitably jumped in price after they were featured on the site. Chastain knew which would be chosen, so shortly after the NFTs appeared on the homepage, he flipped them for profit. “That kind of attitude Nate embodied at the time was beautiful prevalent in the space,” said 1 erstwhile employee.
Chastain was yet sentenced to 3 months in prison — the first time the Department of Justice successfully prosecuted individual for NFT insider trading. However, insider trading was only 1 of OpenSea’s issues. Users were besides angry about website outages, NFT collections that were either spam or deliberately fraudulent, and stolen NFTs. “It was like a blood orgy,” a erstwhile worker told me about the company’s increasing difficulties. Another erstwhile staffer said that users joked that OpenSea should alternatively be called “BrokenSea.”
“OpenSea strives to be responsive and tuned in to users,” Galper said.
To combat the abrupt flood in volume and another issues, Finzer and Atallah needed to build out OpenSea’s staff and started bringing in those with large Tech or corporate pedigrees, according to multiple erstwhile employees. “There was no promotion from within,” said one.
“They hired these fucking animals, these reptiles from like Amazon, Facebook, Google,” said another erstwhile employee. “The white walkers came in through the fucking door like in Game of Thrones.”
Much of the current leadership squad arrived in the second half of 2021 and the first half of 2022, including COO Shiva Rajaraman and CTO Nadav Hollander. At its height, OpenSea had around 300 staffers — a crucial expense that, just a fewer months later, Finzer and Atallah would reduce.
“Our precedence has always been to hire the best talent wherever we find it, whether from large Tech, smaller companies, or crypto natives,” wrote Galper.
For the moment, though, the money kept coming. OpenSea’s gross reached an all-time advanced of $265 million in Q1 of 2022. And the 2 cofounders closed their largest backing circular to date: $300 million from blue-chip venture capital firms that valued OpenSea at a whopping $13.3 billion. Finzer and Atallah each owned 19 percent of OpenSea as of late 2021, according to Forbes. On paper, they were billionaires. (Galper said the cofounders’ reported stakes in OpenSea were false. Forbes, though, hasn’t issued a correction regarding the cofounders’ ownership percentages.)
The company’s investors included not only venture capitalists who specialized in crypto but besides a who’s who of Silicon Valley and beyond. There was Shark Tank king Mark Cuban, basketball star Kevin Durant, actor Ashton Kutcher, and DJ 3LAU, all of whom were publically disclosed as investors. According to an interior company document, OpenSea’s cap table besides included James Musk; Jawed Karim, cofounder of YouTube; Scott Belsky, the chief strategy officer of Adobe; and Charlie Songhurst, the erstwhile head of strategy at Microsoft.
Quietly, Finzer, Atallah, and a fistful of early employees were able to cash out any of their equity in the mammoth fundraise, according to a origin acquainted with the deal.
Galper confirmed to me that any employees were able to sale their shares “in connection with the Series C financing,” but he didn’t specify the size of Finzer’s and Atallah’s winnings.
“The squad and investors felt it was the right thing to do to supply any liquidity to those who’d worked so hard to get the company to that milestone,” Galper added.
Five erstwhile employees told me that the cofounders never disclosed the secondary share buybacks to the full staff. “It surprises me a small due to the fact that they seemed very transparent about another decisions,” said 1 person, who added that they were otherwise nonplussed about the news.
And those whose shares vested after the Series C were subsequently blocked from selling their equity, said 2 erstwhile employees. (“The company doesn’t callback any employees requesting to sale to a specified investor after the Series C,” Galper said.)
“The large communicative will be the secondary sales,” said 1 erstwhile staffer. “The remainder is way little funny.”
OpenSea looked like it was becoming mainstream, but the fires wouldn’t go out. Shortly after Hollander, OpenSea’s current CTO, joined the company, his squad found a serious vulnerability in the company’s code that would let an attacker to receive money for an NFT without sending it to the victim. No exploit happened, “but it was 1 of the scariest things,” Finzer later told employees in 2023.
In March 2022, just as Finzer celebrated OpenSea’s inclusion on Time magazine’s list of the 100 most influential companies of the year, the NFT boom was sputtering. full sales volume across the marketplace plummeted from about $6 billion in January 2022 to just above $1 billion in June, per CryptoSlam. OpenSea’s quarterly gross decreased as well, dropping to $171 million in the second quarter.
Even worse, up until the first half of 2022, OpenSea kept most of its cash reserves in Ether, the second largest cryptocurrency by marketplace capitalization, according to erstwhile employees who were in the all-hands gathering where Finzer briefed them on the company’s finances. alternatively than convert the crypto funds into little volatile assets, Finzer said that OpenSea wanted to put its money where its mouth was and support the crypto industry. The only problem? By June 2022, Ether’s price had dropped almost 80 percent in value from November 2021.
Subtracting the money lost from the price decline and another debts, OpenSea had a net failure of $170.7 million in the second 4th of 2022, even though the startup inactive raked in $171 million in revenue. (Galper disputed this figure but would not supply financials.) “I was like, ‘What the fuck, you’re not somebody’s individual investor. Why are we gambling on this erstwhile we have so much more upside?’” 1 erstwhile worker thought after Finzer announced the financial mishap.
Despite the financial struggles, OpenSea showed up in force that summertime at the 2022 incarnation of NFT.NYC. “Did I hear that OpenSea took over a full hotel in Midtown?” Jodee Rich, cofounder of the conference, asked him at a talkback at Radio City Music Hall. “Sounds about right,” Finzer responded, smiling.
That same week, while much of the OpenSea staff was in the city, Finzer held a companywide gathering to assuage any concerns about the business’s future, according to 2 erstwhile staffers. The takeaway, both erstwhile employees said, was clear: don’t worry.
Less than 1 period later, OpenSea laid off 20 percent of its staff.
Around the same time, Atallah said that he would be stepping back from OpenSea but stay on the board. It was unclear to erstwhile employees why Atallah decided to leave. “Devin and Alex, they always had a weird vibe, and I don’t think they were truly good together,” said 1 person. “I’d heard that they didn’t rather see eye to eye on quite a few things,” said another.
One OpenSea investor, who asked to stay anonymous, said that Atallah told him he left on good terms. “I think he’s 1 of those guys that loves the early days,” said the investor. “As shortly as it started to scale and it was getting a small bit more corporate in nature, I think he was like, ‘I want to go do my next thing.’”
Atallah, in a statement, disputed any intimations of conflict between him and Finzer and echoed the investor’s take: “I have always loved early phase stuff, and yet decided I wanted to research my own thing again.”
But erstwhile Atallah left to do his next thing, Finzer stayed on and led a startup that seemed to be on vastly different footing than it had been just a fewer months ago. In the 3rd 4th of 2022, gross free-falled to just $32 million, and OpenSea ran at a deficit of more than $27 million. “Morale just got truly weird truly quickly,” said 1 erstwhile employee.
In October, yet another thorn in OpenSea’s side presented itself: a fresh NFT marketplace called Blur. OpenSea utilized to have a virtual hold on billions of dollars in NFT trading volume. It would shortly gotta fight for scraps.
Founded by the pseudonymous coder “Pacman,” who would yet uncover himself to be Tieshun Roquerre, a 20-something MIT dropout and Y Combinator alum, Blur doubled down on a financialized conception of NFTs: assets that traders swap back and distant in search of profit.
Many professional traders wanted to maximize profit, and the royalty fees offered by markets like OpenSea cut into their bottom line. Blur privileged traders over creators and did not give artists a percent take all time their works sold on its platform. Add in a promised cryptocurrency it said it would distribute to its power users — fundamentally free money — and NFT flippers flocked to the fresh marketplace.
Blur rapidly ate into OpenSea’s marketplace share. By February 2023, on the strength of the promised launch of its cryptocurrency, it had surpassed OpenSea and almost tripled the monthly trading volume of Finzer’s startup, according to DappRadar. Meanwhile, OpenSea’s quarterly gross continued to decrease, dropping to $23 million in the 4th fourth of 2022 and then $19 million in the first 4th of 2023.
Finzer felt like he had to react. Blur’s abrupt emergence “destabilized any kind of product imagination we had,” said 1 erstwhile employee. “It was kind of a dumpster fire.”
A current worker pushed back against that characterization. “It never truly disrupted my work, per se,” they told me, in mention to Blur’s arrival. “I was continuing to build stuff and go about my average business.”
OpenSea rapidly abandoned its mission to bring NFTs to the masses and alternatively decided to cater to speculators, multiple erstwhile employees told me. Finzer even spoke with crypto founders and lawyers about the possible of the company launching its own cryptocurrency, according to a origin acquainted with the matter.
“OpenSea has always focused on the long word alternatively of episodic developments across the competitive landscape,” said Galper, who confirmed that the company’s executives discussed launching a cryptocurrency in the past.
But a token launch would have been risky, as the Securities and Exchange Commission has repeatedly argued that the vast majority of cryptocurrencies are unregistered securities. After the fall of FTX in November 2022, the SEC initiated a broad run against crypto and reached settlements with or sued any of the largest players in the industry, including the crypto exchanges Coinbase and Binance.
Then, after NFT.NYC in May 2023, OpenSea had another circular of smaller, unpublicized layoffs, according to erstwhile employees. “The moving gag just kind of became that everyone’s frightened of NFT.NYC due to the fact that all of the layoffs came right after it,” said 1 erstwhile staffer.
Galper wrote that “the company went through a tiny reorganization that led to changes in the structures of any teams and, consequently, the departures of respective employees.”
In August, the marketplace announced that it would halt enforcing creator royalties, much to any employees’ dismay. This led to a bout of interior dissent, said erstwhile staffers. “I inactive don’t think OpenSea has truly identified their audience and gone after it,” added 1 person. “They just kind of keep shooting in the dark.”
Amid the uproar over OpenSea’s decision to do distant with royalties, Finzer and Yu-Chi Kuo, his partner and a erstwhile crypto hedge fund manager, left fresh York City for a “desert adventure,” per Kuo’s Instagram, and headed to Burning Man.
(This was the first vacation Finzer had taken in over a year, Galper said.)
While Finzer and Kuo were partying in the desert mud, the SEC took its first enforcement action against the NFT manufacture and said NFTs issued by Impact Theory, a media company created by the founders of Quest Nutrition, were unregistered securities. Just a fewer weeks later, the SEC charged Stoner Cats 2, the company behind a Mila Kunis-backed animated series that features Ashton Kutcher and Jane Fonda, with issuing NFTs that the agency argued were unregistered securities. Impact explanation and Stoner Cats 2 agreed to cease-and-desist orders and paid $6.1 million and $1 million, respectively, in legal penalties.
Unbeknownst to any employees at OpenSea, their company was besides in the midst of 2 separate regulatory “matters.” The SEC had issued OpenSea third-party subpoenas, or mandatory information requests, in regards to another entities. In addition, OpenSea besides had a line lawyer from the agency assigned to its “case” and was engaged in “custodial paper production” with the agency, per interior company documents.
Legal counsel described the back-and-forth as the “SEC matter” and, in an interior document, spelled out OpenSea’s defenses. These included arguments that NFTs are not securities, that OpenSea is not a securities exchange or broker, and that OpenSea is protected by both the First Amendment and Section 230 of the Communications Decency Act, which stipulates that online operators are not liable for third-party content on their platforms. “The SEC does not comment on the existence or nonexistence of a possible investigation,” said David Ausiello, an agency spokesperson.
Galper, OpenSea’s spokesperson, confirmed that OpenSea has received requests from the SEC since 2022. “We cooperate with regulators and law enforcement as part of our standard practice, and we are committed to complying with applicable laws and regulations,” he said.
While any staff weren’t aware of the SEC matter, a vocabulary guide instructed employees on appropriate terminology erstwhile either talking to each another or the public about NFTs and OpenSea. alternatively of saying “buy, sell, or pay on OpenSea,” legal counsel told employees to say “purchase on the blockchain,” “purchase utilizing MoonPay” (a crypto payments company), or “buy utilizing OpenSea.” The guide said, “This discrimination is very crucial to keep clear, as it impacts our taxation and legal obligations.”
Other terms employees should avoid erstwhile talking about OpenSea were “exchange,” “broker,” “marketplace,” “profit,” “shares,” “stocks,” “trading,” “trade,” “traders” — words utilized erstwhile talking about securities, the domain of the SEC.
There was besides the “FTC matter,” in which OpenSea submitted papers to the regulator. interior papers I obtained did not supply more item another than the existence of the back-and-forth, and the FTC did not respond to a request for comment.
Galper confirmed that OpenSea received paper requests from the FTC and said its last submission to the agency was in August 2023. He declined to say why the FTC and SEC were asking for papers from OpenSea and didn’t comment erstwhile asked if OpenSea has received the formal communication called a Wells announcement from the SEC that indicates a business or individual is subject to pending litigation.
One day after I told OpenSea we were planning to print this story, Finzer announced on X that his startup had received a Wells notice. “We’re shocked the SEC would make specified a sweeping decision against creators and artists. But we’re ready to stand up and fight,” he wrote.
“Usually, erstwhile an agency requests papers from a business, it’s due to the fact that they think something is wrong,” Christopher Odinet, a prof. at Texas A&M University who’s researched legal issues surrounding cryptocurrencies, told me.
Christa Laser, a prof. at Cleveland State University who’s besides researched crypto’s intersection with the law, said that, while the FTC’s information requests may stem from suspicions surrounding OpenSea itself, its interest in the NFT marketplace may simply be an effort for the regulator to better realize an emerging market.
“The FTC is more likely to do paper requests not pursuant to investigations than the SEC,” she said.
And there were ongoing inbounds from various taxation authorities both domestically and internationally. The Australian Taxation Office (ATO), for example, was in a back-and-forth with OpenSea over whether the startup was required to pay taxes not only on the fees the marketplace takes for all NFT sale on its platform but besides on the full price of the NFT, according to interior documents.
In early October, OpenSea’s legal squad flew to Australia to make the case that their platform should be immune from the harder taxation hit, according to company documents. If the ATO does not decide in OpenSea’s favor, Finzer’s startup would be on the hook for about $130 million, per numbers discussed internally in August 2023. And that’s not to mention inquiries from taxation agencies in Washington state, India, and Taiwan.
The ATO declined to comment on OpenSea, citing confidentiality and privacy laws. Washington state declined to comment for akin reasons. The taxation agencies for India and Taiwan did not respond to requests for comment.
Galper, OpenSea’s spokesperson, declined to comment on the company’s communications with taxation authorities.
“We’re definitely of large interest to policymakers, regulators,” said OpenSea’s erstwhile general counsel, Gina Moon, in an all-hands meeting, according to a paper I obtained, “and, eventually, the court and public will see what we say.”
On Halloween, as OpenSea’s quarterly gross reached lows not seen since the beginning of the NFT boom, Finzer and his partner attended Heidi Klum’s yearly Halloween organization at the nightclub Marquee in fresh York City. Finzer dressed as an “AI hacker,” per Kuo’s Instagram, and wore glasses and a hoodie emblazoned with OpenAI’s logo and carried a keyboard. With a bloodied knife and mechanical-looking prosthetics, his partner dressed as his “AI girlfriend.”
(Galper, OpenSea’s spokesperson, pushed back, arguing that Finzer’s costume was makeshift, that he only showed up for the photograph opp, and that after he walked down the orange carpet, he rushed home to take work calls to proceed to plan out a large change for his startup.)
Three days later, and 1 day after Sam Bankman-Fried, the erstwhile CEO of FTX, was found guilty of fraud, OpenSea announced widespread layoffs that led to the departures of more than 100 employees, about 56 percent of staff. On X, Finzer said that he was “reorienting the squad around ‘OpenSea 2.0,’” a strategy and product change about which he provided fewer public details. “It’s a immense gamble, and it’s beautiful intense,” he later told employees.
Ex-employees received 4 months of cash severance and six months of wellness insurance coverage, among another benefits, according to a memo Finzer sent to employees.
Finzer invited the remaining staff to an off-site to discuss the company’s fresh direction. “The real goal of these changes is moving from a position where we’re following to where we’re leading,” he said during an all-hands gathering at a Hollywood mansion erstwhile owned by Katy Perry and Russell Brand, according to a paper I obtained.
According to Lorens Huculak, a associate of the executive team, during the all-hands meeting, OpenSea planned to “become the portal to Web3,” in mention to the thought that the future of the net will be based on the blockchain. The startup planned to rewrite much of its code and let users to more easy track crypto transactions across the platform without venturing to another websites. “We’ll become an aggregator, not only of chains, but besides protocols, marketplaces, all kinds of liquidity, including tokens,” said Huculak.
The product revamp besides includes features that make OpenSea better able to compete with Blur, according to a origin acquainted with the fresh product. “It’s simply a reskin of OpenSea Pro,” they said, referencing the arm of OpenSea’s platform that caters to NFT flippers. However, a current worker pushed back against that description and said there’s more to the relaunch than upgrades for traders and added capabilities to track transactions. That same employee, however, declined to supply any more details about the relaunch.
“Our plans around 2.0 are confidential,” Galper said in a statement.
Evidently, the fresh product imagination and drastic layoffs didn’t initially inspire employees or investors. Shortly after the pivot, The Information reported that Coatue Management, 1 of OpenSea’s largest backers, effectively cut the startup’s valuation to only $1.4 billion in Q2 2023, a precipitous drop from its $13.3 billion sticker price little than 2 years earlier.
Then, multiple members of OpenSea’s executive squad left after the layoffs, including the general counsel, the vice president of operations, the head of HR, and the head of communications. OpenSea offered remaining employees a 20 percent cash bonus on top of their existing salaries to keep them on board, according to interior company communications. (“We paid people to leave if they didn’t want to stay at OpenSea, and those who believe in the future of the company made the choice to stay to aid us build,” Galper said.)
Amid the departures, executives worried that no of the remaining engineers or product managers were women, especially since any who had left the company complained of sex discrimination, according to interior documents. (OpenSea had previously hired an outside investigator to examine 1 of these complaints, and the investigator deemed it to be unfounded.)
“If we receive an worker complaint, we take it seriously and analyse promptly,” Galper said in a statement. “No claim of sex discrimination has always been substantiated, nor have we always had any litigation, arbitration, or mediation on the topic.”
However, since the first shock of the layoffs, morale has picked back up, according to 3 current employees. “There’s just so much less, like, bullshit, like Slack messages and meetings,” said one. “I was pleasantly amazed by how rapidly people got back in the saddle,” said another.
On the same spring day erstwhile I visited NFT.NYC, I trekked to a pier on the Hudson River.
Magic Eden, an OpenSea competitor, was hosting what it called a “Degen Yacht Party” on a floating casino turned organization boat. As it rained, I waited in line to board the yacht and struck up a conversation with James Woods, a collector whose T-shirt bore the image of an NFT he owned: a pink dog with black sunglasses, a sailor hat, and a tan hoodie. “At any NFT-related events or any crucial events in my life, I effort to dress up like this,” said Woods, besides wearing sunglasses, a sailor hat, and a hoodie. He even wore the getup to a first date at a casino: “It went great.”
Eventually, we walked on board. There were ice sculptures, DJs, free food (akin to the spread at a bar mitzvah, 1 attendee told me), free alcohol, an elevator embossed in gold paint, and energy drinks. I spoke with a man who goes by “Breads,” another named “Toast” (the 2 had a heartfelt reunion), individual who said “Cyber Frogs” changed his life, and a female carrying a stuffed animal called “Chonky.”
Most people I chatted with spoke sick of OpenSea. I was, after all, in enemy territory. “Instead of doubling down and supporting the creators who put them in the position to be the best marketplace in the market,” said Woods, in mention to OpenSea’s decision to not enforce royalty fees, “they alternatively turned their backs on all of us.”
The yacht swayed back and distant in the rain, but we never left the pier. The storm was besides intense. Eventually, on the 3rd floor, I chatted with Zhuoxun Yin, cofounder and COO of Magic Eden. Like OpenSea, Magic Eden is backed by serious venture capital firms and has a billion-dollar-plus valuation, as of its last backing round. “It’s not the kind of manufacture where you can sit back and just number your chickens,” Yin, who goes by Z, told me. “Everything is moving so fast.”
While Blur stole hardcore NFT traders distant from OpenSea, Magic Eden appeared to be eating into OpenSea’s popularity with creators. In February, Yuga Labs, the company behind Bored Ape Yacht Club and another blue-chip NFT collections, launched a competing marketplace with Magic Eden. And in April, Yin’s company surpassed both OpenSea and Blur in monthly NFT trading volume, according to DappRadar.
Despite the marketplace turbulence, the majority of people I spoke to who had a financial interest in the NFT manufacture were sanguine about its future. “If the take is OpenSea is dying and so NFTs are dead, that’s the incorrect take,” TJ Fuller, cofounder of Forgotten Runes, a fantasy franchise that lets fans own characters as NFTs, told me. He believes that the technology is inactive innovative: “Where we trade [NFTs] doesn’t matter.”
The majority of erstwhile OpenSea employees I spoke with besides saw future usage cases for the tokens: ticketing for live events or video game items users can more definitively say they own. But, added some, the current culture of speculation for speculation’s sake isn’t scalable beyond crypto diehards. “I think it’s kind of garbage the way it is now,” said 1 erstwhile staffer. “I don’t think selling JPEGs is worth it.”
Near the end of the yacht party, I walked down to the dance floor, pushed past a man thrashing on a flute as if he were a associate of Metallica, and said goodbye to Woods, the man in the sailor hat. erstwhile asked for his closing thoughts on NFTs, he said, “Buy them as collectible items. Don’t anticipate to make money off of them.”
For OpenSea, possibly that’s good advice. It was losing about $30 million in the first 3 quarters of 2023, according to an interior paper I obtained. (It, however, projected that the November layoffs would reduce the company’s overhead in 2024.) And in June, the trading volume on its platform reached lows not previously seen since before the NFT boom in early 2021, per DappRadar.
OpenSea inactive has plenty of runway. It had $438 million in cash and $45 million in crypto reserves as of November 2023, according to an interior document, and it’s coasting on that capital as it hopes a “2.0” pivot will aid it navigate choppy seas.
Finzer erstwhile said he wanted his startup to build an ocean, not an aquarium.
But if the NFT marketplace continues to decline, OpenSea won’t lead to an ocean of digital collectibles. It will be dead in the water.
