Ex OpenSea employee Nate Chastain could face up to 40 years in prison for an elaborate conspiracy to benefit from NFTs by utilizing insider information.
Chastain is charged for profiting from insider knowledge of the foreknowledge of which NFTs would be displayed on OpenSea’s home page by buying the NFTs and reselling them for substantially more than they were originally listed for in an indictment unsealed today by the United States Attorney official.
Chastain allegedly took advantage of a scenario in which purchasers were ready to pay a premium for NFTs exhibited on OpenSea’s main page and for NFTs by the same artist whose work was displayed on the homepage between June and September 2021.
Chastain bought the NFTs because he knew which NFTs would be highlighted on the home page. He sold them for up to five times their initial quoted price when they surfaced on the home page later.
Nate was using OpenSea’s insider information for personal gain
“NFTs might be new, but this type of criminal scheme is not. 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.”
Damian Williams, the U.S. Attorney
Chastain hid his identity by using anonymous crypto wallets and profiles on OpenSea, as first reported by Twitter user Zuwu.
OpenSea responded by claiming it would conduct “an urgent and thorough examination of the situation,” subsequently revealing that a third party was looking into it. After that, the company changed its policy to ban employees from purchasing or selling items from current marketplace collections.
One count of wire fraud and one count of money laundering have been filed against Nate Chastain. A maximum term of 20 years in prison is imposed on each of these offenses.