In a groundbreaking move, the U.S. Department of Justice (DOJ) is charging a former executive of the world’s leading non-fungible token (NFT) marketplace with insider trading.
According to a new press release, the DOJ is charging Nathaniel Chastain, the former product manager of OpenSea, with wire fraud and money laundering after he allegedly used insider information to pocket NFTs before they were featured on the marketplace.
This marks the first-ever crypto insider trading case pursued by authorities.
“In violation of the duties of trust and confidence he owed to his employer, OpenSea, Chastain exploited his advanced knowledge of what NFTs would be featured on OpenSea’s homepage for his personal financial gain.
As part of his employment, Chastain was responsible for selecting NFTs to be featured on OpenSea’s homepage. OpenSea kept confidential the identity of featured NFTs until they appeared on its homepage…
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.”
According to the DOJ, Chastain would then secretly sell the NFTs he pocketed at higher prices to earn a profit.
“After those NFTs were featured on OpenSea, Chastain sold them at profits of two to five times his initial purchase price. To conceal the fraud, Chastain conducted these purchases and sales using anonymous digital currency wallets and anonymous accounts on OpenSea.”
A spokesperson for OpenSea provided the following statement:
“As the world’s leading web3 marketplace for NFTs, trust and integrity are core to everything we do. When we learned of Nate’s behavior, we initiated an investigation and ultimately asked him to leave the company. His behavior was in violation of our employee policies and in direct conflict with our core values and principles.”
If convicted, Chastain could face up to 20 years in prison.
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