OpenSea NFT insider trading case reaches its conclusion.
Nathaniel Chastain, former OpenSea product manager, was sentenced to 3 months in prison over a scheme to commit insider trading in Non-Fungible Tokens (NFTs).
On August 22nd, the United States Attorney’s Office issued an official press release explaining that Chastain used confidential information provided by his position in the company for his own financial gain.
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U.S. Attorney Damian Williams stated that in addition to the prison term, Chastain was sentenced to 3 months of home confinement, 3 years of supervised release and a fine of $50,000. Additionally, he was ordered to forfeit the Ethereum he made trading the featured NFTs.
The statement also added that Chastain was “previously convicted at trial of wire fraud and money laundering.”
As a manager, Chastain has the authority to select which NFTs would be featured on the homepage, which typically substantially increases their value. From June to September 2021, the former manager used his know-how related to OpenSea NFT practices and would buy the assets before they were announced as featured.
Then, he’d sell them for a higher profit, “two- to five-times his initial purchase price.” To evade detection, he’d conduct the sales and purchases using anonymous digital currency wallets and accounts.
Williams said:
Nathanial Chastain faced justice today for violating the trust that his employer placed in him by using OpenSea’s confidential information for his own profit. Today’s sentence should serve as a warning to other corporate insiders that insider trading – in any marketplace – will not be tolerated.
Reportedly, Chastain has until November 2nd to surrender himself, but his lawyers are preparing to appeal the decision.
While Chastain himself was found guilty of illegally selling NFTs, OpenSea also faced a lawsuit over stolen assets.
