Former OpenSea Product Charged for Insider Trading Fraud

Nathaniel Chastain, the former Head of Product at OpenSea, the world’s biggest Non-Fungible Token (NFT) trading platform has been indicted with insider trading charges. The arraignment was done by the duo of Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation. 

The Department of Justice said Chastain is known to catch as many gains as he could by buying NFTs at a relatively low price based on information he garnered based on his role at the company. Chastain typically acquires NFTs that are on track to be listed on the homepage of the OpenSea platform.

“In this case, as alleged, Chastain 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,” FBI Assistant Director-in-Charge Michael J. Driscoll. “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. The FBI will continue to aggressively pursue actors who choose to manipulate the market in this way.”

Chastain will be 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. The figure is just an estimate as noted by the announcement, and the final sentencing will be handed out by a Judge.

Insider Trading in Crypto

The incidence of insider trading is not uncommon in the digital financial industry but rarely happens in the crypto ecosystem. While the DoJ and the FBI have been able to fish out the first incidence in this nascent world, the emphasis remains that more of such may surface in the near future.

The DOJ is now very proactive in fishing out offenders in the crypto ecosystem, a trend that indicates sanctions in this space are as easy to mete out as it is in the mainstream financial world.