A Federal Judge of the United States District Court for the Southern District of New York has finally given a verdict on a former OpenSea employee’s lawsuit.
According to the judge, Nathaniel Chastain, the 31-year-old former OpenSea Head of Product who was indicted in May for Non-fungible token (NFT) insider trading, is a first-time offender and equally has a potentially promising future.
Former OpenSea Head of Products to Pay $50,000 Fine
Therefore, he was sentenced to three months in prison and fined $50,000 for damages. In addition to his prison term, he has been sentenced to three months of home confinement, and three years of supervised release, and he is also expected to forfeit the Ethereum (ETH) he made from trading the defeated NFTs.
While the sentence seems to have been soft-pedaled, Attorney Damian Williams is confident that it would serve as a warning to other corporate insiders, portraying to them that insider trading in any marketplace will not be tolerated by authorities. He also acknowledged the investigative work done by the Federal Bureau of Investigation (FBI).
First-ever Digital Asset Insider Trading
Chastain was said to be involved in the first-ever insider trading associated with digital assets, particularly NFTs. Even though he was convicted in May, the former OpenSea employee’s trial began in April and he was charged with one count of wire fraud and another count of money laundering.
While working at OpenSea, it was his responsibility as the Head of Products to confidentially decide on the digital collectible that would be featured on the homepage. These NFTs are usually sold for relatively low prices before they hit the homepage. Once listed, their prices increase, as confirmed by the United States Department of Justice (DoJ)
The Power Abuse Indictment
Attorney Williams charged Chastain in 2022 claiming that he leveraged confidential company information to acquire NFTs at low prices from the popular NFT marketplace. He later sold them and made a profit of up to $50,000.
It is worth noting that Chastain conducted both the purchase and sales using anonymous crypto wallets and anonymous accounts on OpenSea. This was regarded as an abuse of his position in OpenSea but his lawyers claimed that he did not commit any crime seeing that the marketplace had no policy against such action.