NFT

Former OpenSea Executive Charged for Insider Trading

Marking the first charge of its kind for the digital asset space.

NFT

Former OpenSea Executive Charged for Insider Trading

Marking the first charge of its kind for the digital asset space.

On Wednesday, June 1, Nate Chastain, the former head of product development for NFT marketplace OpenSea, was charged in the first-ever digital asset insider trading scheme. Chastain is charged with one count of wire fraud and one count of money laundering, each of which carries a maximum sentence of 20 years in prison.

In June of 2021, the former executive was removed from his position after OpenSea found public accusations of his insider trading to be legitimate. Members of the NFT community noticed that the time and dates on which Chastain purchased his NFTs would often be just days or hours before the same project was prominently featured on OpenSea’s homepage. He would then sell the digital assets following a rise in the price of often two to five times his initial purchase price, according to Ethereum blockchain records.

“NFTs might be new, but this type of criminal scheme is not.  As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself,” said U.S. Attorney Damian Williams, adding that “Today’s charges demonstrate the commitment of this Office to stamping out insider trading – whether it occurs on the stock market or the blockchain.”

To conceal the fraud, Chastain allegedly used multiple anonymous cryptocurrency wallets and OpenSea user accounts.

“With the emergence of any new investment tool, such as blockchain-supported non-fungible tokens, there are those who will exploit vulnerabilities for their own gain, said FBI Assistant Director-in-Charge Michael J. Driscoll, adding that “the FBI will continue to aggressively pursue actors who choose to manipulate the market in this way.”

The penalties and charges described in the indictment are accusations and are for informational purposes only — Chastain is innocent until proven guilty in a court of law and sentenced by a judge.

Elsewhere in Web3, the founder of Shiba Inu cryptocurrency token steps down and deletes all social media posts.

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