A former employee of OpenSea, the world’s largest NFT marketplace, was charged with insider trading in the first-ever such case involving digital assets, US prosecutors said.
Nathaniel Chastain, 31, a former product manager at OpenSea was arrested Wednesday by the FBI on wire-fraud and money-laundering charges, according to Damian Williams, the U.S. Attorney for the Southern District of New York.
NFTs, or non-fungible tokens, are unique digital assets that are often highly sought by collectors. Investors and speculators are buying everything from pictures of digital apes to cute penguins and trading cards. Prices of NFTs can fluctuate wildly in a matter of hours, and sometimes minutes.
Chastain was responsible for selecting NFTs that were to be featured on OpenSea’s homepage between June 2021 and September 2021, according to the government.
While the company kept the information confidential, Chastain secretly bought dozens of NFTs shortly before they were featured, selling them later for two to five times more than he paid, prosecutors said.
He allegedly used digital wallets and anonymous accounts on OpenSea to hide the purchases.
“NFTs might be new, but this type of criminal scheme is not,” Williams said. “Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself.”
Chastain pleaded not guilty at his arraignment Wednesday before US Magistrate Judge Barbara Moses, who agreed to release him on $100,000 personal recognizance bond. He faces as long as 20 years in prison if convicted, Williams said.
“Mr. Chastain is not guilty of the charges,” his lawyer, David Miller, said after court. “When all the facts are known, we are confident he will be exonerated.”
Chastain was ordered to return to court on June 15 for an initial court appearance before U.S. District Judge Jesse Furman.