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Considered to be the first-ever indictment of insider trading in NFTs, Nathaniel Chastain, OpenSea’s former head of product has been charged by the United States Department of Justice with one count of wire fraud and one count of money laundering.

What we know

According to the Department of Justice, Chastain used confidential information about what NFTs were going to be featured on OpenSea’s homepage for his personal financial gain.

He was subsequently arrested.

Chastain sold dozens of NFTs with prior knowledge

From June 2021 to 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.

He then sold them at a profit two to five times the original purchase price using anonymous digital currency wallets and anonymous accounts on OpenSea.

FBI Assistant Director-in-Charge Michael J. Driscoll said Chastain allegedly launched an age-old scheme to commit insider trading by using his knowledge of confidential information to purchase dozens of NFTs in advance of them being featured on OpenSea’s homepage.

Each of the charges carries a potential maximum sentence of 20 years in prison.

OpenSea CEO admits fraud

Meanwhile, OpenSea has admitted that an employee used inside knowledge to outsmart the market, and the company’s CEO Devin Finzer publicly accepted Chastain’s resignation in a blog post.

At the time, Finzer claimed that OpenSea put new rules in place to protect against this.

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