Former Product Manager At OpenSea Charged With Insider Trading Of NFTs

New York City -- A former product manager at OpenSea, the world's biggest non-fungible token (NFT) marketplace, has been charged in the first-ever digital asset insider trading scheme.

The U.S. Attorney’s Office in the Southern District of New York announced the indictment of Nathaniel Chastain, who was arrested in New York for allegedly committing wire fraud and money laundering in connection with a scheme to commit insider trading in NFTs, each of which carries a maximum sentence of 20 years in prison.

As per the DoJ, Chastain allegedly used sensitive information about the NFT collections, which will be featured on the OpenSea homepage for his own personal gain.

The indictment unsealed in the Manhattan federal court alleged: "Chastain was responsible for selecting NFTs to be featured on OpenSea’s homepage. OpenSea kept confidential the identity of featured NFTs until they appeared on its homepage. After an NFT was featured on OpenSea’s homepage, the price buyers were willing to pay for that NFT, and for other NFTs made by the same NFT creator, typically increased substantially."

"From at least in or about June 2021 to at least in or about September 2021, Chastain used OpenSea’s confidential business information about what NFTs were going to be featured on its homepage to secretly purchase dozens of NFTs shortly before they were featured. After those NFTs were featured on OpenSea, Chastain sold them at profits of two- to five-times his initial purchase price. To conceal the fraud, Chastain conducted these purchases and sales using anonymous digital currency wallets and anonymous accounts on OpenSea."

Chastain was to be presented Wednesday in the U.S. District Court for the Southern District of New York.

"NFTs might be new, but this type of criminal scheme is not," said U.S. Attorney Damian Williams in the statement. As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself. Today’s charges demonstrate the commitment of this Office to stamping out insider trading – whether it occurs on the stock market or the blockchain."