Employee of OpenSea has charged with insider trading by the FBI

FBI Charges OpenSea Employee for NFT Scam

On Wednesday, New York City’s Southern District of New York indicted and detained Nathaniel Chastain, the former product manager for online marketplace OpenSea.

By “using confidential knowledge regarding which NFTs would be advertised on OpenSea’s site for his financial advantage,” the 31-year-old is charged with one count of wire scam and one count of money laundering.

An official Department of Justice news release states that the maximum penalty for each offence is twenty years in jail.

On this occasion, the Department of Justice is pursuing an insider trading investigation for the first time, according to authorities.

Must Read, NFT Scams: Is wash trading a Crime?

At the outset, Chastain’s stated goal was quite clear

Chastain was charged in the indictment with picking NFTs for OpenSea’s website and posting them. To avoid raising prices for both the featured NFT and other NFTs from the same developer, OpenSea withheld these homepage options until they were available for purchase.

Allegedly, Chastain would purchase an NFT between June and September 2021, soon before the artwork was posted on OpenSea’s website. According to the claim, It’s possible he sold these NFTs for two to five times his original investment after they were on the front page.

Anonymous digital currency wallets and anonymous identities on OpenSea are used to cover his trails by the DOJ.

As US Attorney Damien Williams said it, “NFTs are unique, but this sort of criminal organization is not.” The DOJ said today, “Today’s charges demonstrate the Office’s commitment to eradicate insider trading on the stock market and the blockchain.”

FBI Assistant Director-in-Charge Michael J. Driscoll has declared that the agency will continue to pursue market manipulators vigorously.

The startup’s limits on workers’ access to classified data to invest in NFTs were particularly low until September 2021, when Chastain’s alleged illicit conduct was first discovered.

There have been two additional employee rules introduced since then, one of which prevents OpenSea workers from acquiring or selling any NFTs while the firm is promoting them, and another of which bans employees from “using secret information to acquire or sell any NFTs, whether they are accessible on the OpenSea platform.”

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