The Federal Bureau of Investigation (FBI) has charged and arrested an OpenSea executive in the first-ever NFT insider trading scheme.
Wednesday, June 1, the Department of Justice issued a press release announcing the details of the history-making cyber crime.
Nathaniel Chastain was a product manager at OpenSea — the biggest NFT marketplace — when he engaged in illicit trading practices.
During his time as an executive with the company, Chastain was in charge of curating NFT features on the OpenSea.com home page. Prior to featuring a specific collection, he would allegedly purchase the NFTs — only to re-sell them for major profits following their post-feature price increase.
In addition, to cover up the unethical actions, Chastain used anonymous OpenSea accounts and wallets.
As a result, Chastain was charged with both money laundering and wire fraud. If proven guilty, Chastain risks up to 20 years in prison for each of the two crimes.
U.S. Attorney and FBI statements regarding the NFT arrest
According to the statements published on behalf of the U.S. Attorney Southern District of New York Office, authorities have an ongoing commitment to tracking down digital crimes.
Despite the novelty of the non-fungible token industry, the act of insider trading is a common scheme:
“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.”— Damian Williams, U.S. Attorney
“In this case, as alleged, Chastain launched an age-old scheme to commit insider trading by using his knowledge of confidential information to purchase dozens of NFTs in advance of them being featured on OpenSea’s homepage,” Michael J. Driscoll, FBI Assistant Director-in-Charge explains.
To conclude, Driscoll stated, “The FBI will continue to aggressively pursue actors who choose to manipulate the market in this way.”
According to Justice.gov, the Chastain case marks the first insider trading scheme concerning digital assets in FBI history.
Disclosure: This content is intended to be used for educational and informational purposes only. Individual results may vary. You should perform your own due diligence and seek the advice from a professional to verify any information on our website or materials that you are relying upon if you choose to make an investment or business decision. Investment, real estate, and business involve great risk and there is no guarantee of performance or results.
We are not attorneys, investment advisers, accountants, tax professionals or financial advisers and any of the content presented should not be taken as professional advice. We recommend seeking the advice of a financial professional before you invest, and we accept no liability whatsoever for any loss or damage you may incur.