U.S. prosecutors in New York’s Southern District have charged and arrested Nathaniel Chastain, a former product manager at the online marketplace OpenSea.
The 31-year-old faces one count of wire fraud and one count of money laundering, in connection with a scheme to commit insider trading in non-fungible tokens, or NFTs, “using confidential information about what NFTs were going to be featured on OpenSea’s homepage for his personal financial gain.”
Each count carries a maximum sentence of 20 years in prison, the Department of Justice wrote in a press release.
 |
| Nathaniel Chastain being arraigned in Manhattan Federal Court by Elizabeth Williams |
On Wednesday, prosecutors in New York’s Southern District charged and arrested Nathaniel Chastain, a former product manager at the online marketplace OpenSea. The 31-year-old faces one count of wire fraud and one count of money laundering, in connection with a scheme to commit insider trading in non-fungible tokens, or NFTs, “using confidential information about what NFTs were going to be featured on OpenSea’s homepage for his personal financial gain.”
Each count carries a maximum sentence of 20 years in prison, the Department of Justice wrote in a press release.
DOJ officials say it is the first time they have pursued an insider trading charge involving digital assets.
Chastain’s alleged scheme was relatively simple.
According to the indictment, Chastain was tasked with selecting NFTs to be featured on OpenSea’s homepage. OpenSea kept those homepage selections confidential until they went live, since a main page listing often translated to a jump in price for both the featured NFT, as well as NFTs made by the same creator.
From roughly June to September of 2021, the indictment says, Chastain would secretly buy an NFT just before OpenSea featured the piece on the front page of its website. Once those NFTs hit the main page, he would allegedly sell them “at profits of two- to five-times his initial purchase price.”
To cover his tracks, he conducted transactions with anonymous digital currency wallets and anonymous accounts on OpenSea, according to the DOJ, which alleges this happened dozens of times.
