The Department of Justice accused the former head of product at OpenSea Nathanial Chastain of insider trading in regards to NFTs. The Manhattan federal court charged him with one count of wire fraud and one count of money laundering.
Chastain was accused of purchasing dozens of NFTs. It’s alleged that he had prior knowledge that the assets would be featured on the NFT marketplace. Chastain sold the tokens at a profit two to five times the original purchase price using anonymous digital currency wallets and anonymous accounts on OpenSea. He is said to have acquired up to 45 NFTs between June – September 2021.
Damian Williams, a US attorney, said the NFTs may be new but this type of criminal scheme is not. He stated that Chastain’s betrayal and other insider trading crimes would be stamped out, be it on the stock market or the blockchain. After falling into the suspect limelight, Chastain resigned from his position in September 2021. The former executive’s suspicious wallet activity was flagged on Etherscan by perceptive Twitter users.
Devin Finzer, the CEO of OpenSea, publicly accepted Chastain’s resignation. He admitted that an employee used inside knowledge to outsmart the market. Finzer also claimed that the marketplace had put new rules in place to protect against this. The Offices’ Securities and Commodities Fraud Task Force and the National Cryptocurrency Enforcement Team are handling the case.
If found guilty, Chastain could get a maximum sentence of 20-years in prison.