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Ex-OpenSea Employee Arrested In First-Ever NFT Insider Trading Scheme
Jun, 08 2022
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On
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."
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Joyashree Dey
CBW - External Analyst
INDIA
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