Former OpenSea Executive Charged With NFT Insider Trading

A former executive at OpenSea, Nathaniel Chastain, has been charged by prosecutors in New York for NFT insider trading.

According to the charges, Chastain was charged for buying dozens of digital collectibles known as NFTs based on advanced knowledge. After buying the NFT items before they were featured on the platform’s homepage, Chastain sold them for up to five times what he paid for them. Insider trading is considered illegal since it can give the buyer an undue advantage in the market.

The First Insider Trading Case In The NFT Sector

While NFTs are still new, insider trading has been practiced over the years. Damian Williams, U.S. Attorney for the Southern District of New York, stated that the charges show the commitment to completely stamp out insider trading in the market. He noted that no matter where it occurs, whether on stocks or BFT, law enforcement agencies will always be quick to apprehend the perpetrators. This will be the first such case involving digital assets.

Chastain will be facing one count of money laundering and one count of wire fraud, with each of the charges carrying a maximum of a 20-year prison sentence.

The prosecutors stated that Chastain, who was responsible for picking the token OpenSEa featured, began the scheme in June 2021. To hide his fraudulent activities, he used an anonymous crypto wallet and anonymous accounts on OpenSea. But in September, he was caught by crypto sleuths, as they called out OpenSea and Chastain on Twitter.

OpenSea Said Chastain’s Conduct Was Against Its Policy

The company responded immediately before launching an investigation and accepting Chastain’s resignation. OpenSea stated that it works strictly based on integrity and trust, as the world’s leading web3 marketplace for NFTs.

“When we learned of Nate’s behavior, we initiated an investigation and ultimately asked him to leave the company, a spokesperson of OpenSea stated. The spokesperson added that his conduct was against the company’s policies and what it stood for.

In January, OpenSea was valued at $13.3 billion after a $300 million venture capital funding round. As NFTs became a major buzz, the company has drawn massive attention and investments from several top venture capitalists. The latest incidence from Chastain may dent the firm’s image slightly.