In the ‘First-Ever Digital Asset Insider Trading Scheme,’ the US arrests a former employee of the Opensea NFT Marketplace.

June 2, 2022

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In the ‘First-Ever Digital Asset Insider Trading Scheme,’ the US arrests a former employee of the Opensea NFT Marketplace.

The US Department of Justice (DOJ) has charged an employee of non-fungible token (NFT) marketplace Opensea with the “first-ever digital asset insider trading conspiracy,” according to the department. The Department of Justice said on Wednesday that Nathaniel Chastain, a former product manager of Ozone Networks Inc. (aka Opensea), had been charged in the “first-ever digital asset insider trading conspiracy.” Chastain was detained in New York on Wednesday morning. The defendant reportedly exploited Opensea’s proprietary knowledge about which NFTs would be featured on its webpage “to covertly acquire dozens of NFTs soon before they were published” from June to September 2021, according to the Justice Department.

Chastain was in charge of selecting NFTs to be published on Opensea’s site as part of his job. The identity of highlighted NFTs was kept secret until they appeared on Opensea’s webpage, according to the DOJ. “When an NFT was highlighted on Opensea’s homepage, purchasers’ willingness to pay for that NFT, as well as other NFTs created by the same NFT developer, often increased significantly.” According to court filings, Chastain acquired around 45 NFTs during the course of his fraudulent operation at approximately 11 different times. “To hide the fraud, Chastain executed these purchases and sells using anonymous digital currency wallets and anonymous Opensea accounts,” according to the DOJ. According to the Department of Justice: Chastain, 31, of New York, is accused of one count of wire fraud and one count of money laundering, each of which carries a potential sentence of 20 years in prison.

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