First NFT insider trading case in US involves former OpenSea employee with knowledge of homepage placement
- A former OpenSea worker is accused of secretly buying 45 NFTs on 11 separate occasions based on information that they would be featured on the site’s homepage
- OpenSea asked Nathaniel Chastain, who has pleaded not guilty, to leave the company after an internal investigation, the company said
US prosecutors in Manhattan on Wednesday charged a former product manager at OpenSea, the largest online marketplace for non-fungible tokens, with insider trading, the first such case involving digital assets.
Prosecutors said Chastain chose which NFTs to feature, and sold his NFTs shortly after they were featured, typically for two to five times what he paid.
In one instance, Chastain allegedly more than quadrupled his money by purchasing the NFT “Spectrum of a Ramenfication Theory” on September 14, 2021, and selling it early the next morning.
Prosecutors said the scheme ran from June to September 2021, with Chastain transacting through anonymous digital currency wallets and accounts at OpenSea, also known as Ozone Networks Inc.
“NFTs might be new, but this type of criminal scheme is not,” US Attorney Damian Williams in Manhattan 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 pleaded not guilty on Wednesday to wire fraud and money laundering charges, each carrying a maximum 20-year prison term, before US Magistrate Judge Barbara Moses in Manhattan. Bond was set at US$100,000.