Ex-OpenSea Employee Arrested In First-Ever NFT Insider Trading Scheme
June 1 Federal Bureau of
Investigation in Manhattan charged a former employee of OpenSea, the biggest
online marketplace for non-fungible tokens, with insider trading, the first such
case involving digital assets.
Nathaniel Chastain, 31, of Manhattan, a former product manager at OpenSea also known as Ozone Networks Inc. was accused of secretly buying 45 NFTs on 11 separate occasions based on confidential information about what NFTs were going to be featured on OpenSea’s homepage for his own monetary benefit, said the US Department of Justice in a statement.
The United States Attorney for the Southern District of New York, Damian Williams, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the FBI, said Chastain chose which NFTs to highlight, and sold his NFTs not long after they were highlighted, commonly for two to five times what he paid.
“NFTs might be new, but this type of criminal scheme is not,” said Damian Williams.
On one occasion, Chastain allegedly more than quadrupled his cash by purchasing the NFT "Spectrum of a Ramenfication Theory" on Sept. 14, 2021, and selling it promptly the following morning.
"NFTs might be new, but this type of criminal scheme is not," Williams said in a statement. "Today's charges demonstrate the commitment of this office to stamping out insider trading - whether it occurs on the stock market or the blockchain."
Chastain proved guilty on Wednesday to wire fraud and money laundering charges, each conveying a greatest 20-year jail term, before U.S. Justice Judge Barbara Moses in Manhattan. The bond was set at $100,000.
"When all the facts are known, we are confident he will be exonerated," Chastain's lawyer David Miller said in an email.
"When we learned of Nate's behavior, we initiated an investigation and ultimately asked him to leave the company," OpenSea said in a statement about Chastain. "His behavior was in violation of our employee policies and direct conflict with our core values and principles."
CBW - External Analyst