U.S. prosecutors have indicted a former product manager of OpenSea for insider trading of NFTs, as per reports on June 1.
NFTs Insider Trading at OpenSea
Nathaniel Chastain has been accused of secretly buying 45 NFTs between June and September 2021 using confidential information from OpenSea.
With insider details on various NFTs set for listing on the world’s largest NFTs marketplace, he would say, favorably feature NFTs he had stakes on at the marketplace’s homepage and sell them for a profit immediately after they were available for bidding.
The former Product Manager ran his scheme for three months. Then, he used anonymous non-custodial wallets and trading accounts before being found out by OpenSea following an internal investigation. In a statement, OpenSea said Chastain’s behavior was in direct conflict with their core values and principles:
When we learned of Nate’s behavior, we initiated an investigation and ultimately asked him to leave the company. His behavior was in violation of our employment policies and direct conflict with our core values and principles.
Prosecutors say that Chastain, using his influential position at OpenSea, would rake in as much as 3x to 5X in profits from his NFT sales. They cited an example in September 2021 when Chastain quadrupled his money after buying an NFT from the “Spectrum of a Ramenfication Theory” collection and dumping it shortly after for a hefty profit.
Stamping out Insider Trading
The charges brought before U.S. Magistrate Judge Barbara Moses, the prosecution team in Manhattan boasted, show their commitment to stamping out insider trading in all markets, including those executed in the blockchain.
NFTs might be new, but this type of criminal scheme is not. Today’s charges demonstrate the commitment of this office to stamping out insider trading – whether it occurs on the stock market or the blockchain.
According to Reuters, Chastain, on June 1, pleaded not guilty before U.S. Magistrate Judge Barbara Moses to wire fraud and money laundering charges. He could face up to 20 years in prison if found guilty.
NFTs are unique tokens minted on public chains like Ethereum and Solana. Unlike Bitcoin and other digital currencies, they cannot be exchanged.
According to trackers, over $36 billion of NFTs had been sold by early June 2022.
- nft blockmagnates: Photo by Tezos on Unsplash