Ex-OpenSea executive accused of insider trading
2 min read
US prosecutors on Wednesday indicted the former head of products at non-fungible tokens (NFTs) platform OpenSea.
They accused Nathaniel Chastain of wire fraud and money laundering following a insider trading. That is, trading assets based on privileged and confidential information.
The official statement stated that this case was the first digital asset insider trading scheme.
Insider trading with NFTs
Chastain, 31, a Manhattan resident, purchased 45 NFTs on 11 different occasions based on confidential information. He knew in advance that the tokens would soon be available on the OpenSea home page.
According to prosecutors, Chastain chose which NFTs to feature on the home page. He then sold his digital assets at higher prices.
According to prosecutors, he generally sold the NFTs for prices two to five times the purchase prices.
On September 14, 2021, for example, he reportedly more than quadrupled his money. He bought the NFT “Spectrum of a Ramenfication Theory” that day and sold it early in the morning of the next day.
As the prosecutors reported, the scheme took place from June to September 2021. Chastain carried out transactions through anonymous ETH wallets on OpenSea.
“NFTs may be new, but this type of criminal scheme is not,” US Attorney Damian Williams said in a statement in Manhattan. “Today’s indictments demonstrate this office’s commitment to ending insider trading – whether in the stock market or on the blockchain.”
Chastain pleaded not guilty
Also on Wednesday, he pleaded not guilty to wire fraud and money laundering charges. Each of the crimes carries a maximum penalty of 20 years in prison. Bail was set at $100,000.
“When all the facts are known, we are confident that he will be exonerated,” Chastain’s lawyer, David Miller, told Reuters.
Meanwhile, OpenSea told the report that when it learned of Nate’s behavior, it launched an investigation. And finally, asked him to leave the company.
“As the world’s leading web3 marketplace for NFTs, trust and integrity are essential to everything we do. Your behavior violated our employee policies. Furthermore, it is in direct conflict with our core values and principles,” said OpenSea.
FBI Assistant Director Michael J. Driscoll said the agency “will continue to aggressively pursue actors who choose to manipulate the market in this way.”
