Former OpenSea Exec Charged With NFT Insider Trading

Nate Chastain allegedly used confidential information to pocket 19 ETH and now faces up to 40 years in prison

article-image

Source: Shutterstock

share

key takeaways

  • The case is considered to be first indictment in a digital asset insider trading scheme
  • Chastain resigned as OpenSea’s product manager in September

The Department of Justice has indicted former OpenSea head of product Nathanial Chastain with insider trading in connection to NFTs in Manhattan federal court on Wednesday. Chastain was charged with one count of wire fraud and one count of money laundering.

According to the indictment, Chastain was accused of buying dozens of NFT (non-fungible tokens) with the prior knowledge that the assets would be featured on the NFT marketplace. 

He then sold them at a profit two to five times the original purchase price using anonymous digital currency wallets and anonymous accounts on OpenSea.

Reuters reported that Chastain acquired up to 45 NFTs between June and September 2021.

US Attorney Damian Williams stated that “NFTs might be new, but this type of criminal scheme is not,” adding that Chastain’s “betrayal” and other insider trading crimes would be stamped out — “whether it occurs on the stock market or the blockchain.”

Chastain resigned from his position after being suspected of profiting from insider information in September 2021. His suspicious wallet activity on Etherscan was initially flagged by perceptive Twitter users.

A spokesperson for OpenSea told Blockworks that Chastain was asked to leave because his behavior was “in violation of our employee policies and in direct conflict with our core values and principles.”

OpenSea admitted that an employee used inside knowledge to outsmart the market, and the company’s CEO Devin Finzer publicly accepted Chastain’s resignation in a blog post. At the time, Finzer claimed that OpenSea put new rules in place to protect against this.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force, with investigation aid from the National Cryptocurrency Enforcement Team.

Each of the charges carry a potential maximum sentence of 20 years in prison.

Update on June 6, 2022 at 1:49 pm ET: Chastian was asked to leave OpenSea before his resignation.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

BUZZ holds shares of Coinbase, Robinhood and MicroStrategy

article-image

Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile

article-image

The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally

article-image

While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders

article-image

Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume

article-image

DeFi on Bitcoin is all the rage right now and Stacks is positioned to benefit