US DOJ accused ex-OpenSea employee of insider trading

Nathaniel Chastain bought NFTs in advance of their listing on the platform’s homepage and then sold them at increased prices

02.06.2022 - 10:30

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2 min

What’s new? US police have arrested a former product manager of the OpenSea NFT marketplace Nathaniel Chastain in connection with insider trading charges. According to the Department of Justice (DOJ), Chastain, having confidential information, bought dozens of tokens in advance of their listing on the platform’s homepage and then sold them at increased prices.

Message on the US DOJ’s website

What else is known about the charge? Chastain purchased non-fungible tokens, using insider information, between June and September 2021. After the NFT collections were added to the OpenSea homepage, he sold them at profits of 2-5 times the purchase price. To conceal the crime, the accused used anonymous wallets and platform accounts for the transactions. In addition, Chastain’s direct tasks as an OpenSea employee included selecting tokens to be featured on the homepage.

The ex-employee of the marketplace has been charged with wire fraud and money laundering, each of which carries a maximum penalty of 20 years in prison.

Attorney Damian Williams stressed that this criminal scheme is not new, and the charges presented demonstrate the prosecutor’s commitment to combating insider trading anywhere, whether it be the stock market or the blockchain.

What events happened before? Cryptocurrency exchange Coinbase was suspected of insider trading after publishing a list of tokens for a potential listing. An unknown person may have accessed the list a day before the release and bought assets worth around $390 000.

Wall Street Journal reporters reported insider trading on the Coinbase, Binance, and FTX exchanges. They noted that a number of crypto wallets purchased digital assets worth hundreds of thousands of dollars shortly before the platforms announced their listings.

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