The US Department of Justice (DOJ) has indicted an employee of non-fungible token (NFT) marketplace Opensea in what the department called “the first-ever insider trading scheme for digital assets.”
DOJ sues former Opensea product manager
The DOJ on Wednesday announced the unsealing of an indictment charging Nathaniel Chastain, a former product manager at Ozone Networks Inc. (aka Opensea), in its “first digital asset insider trading scheme.” Chastain was arrested in New York on Wednesday morning.
The Justice Department stated that from June to September 2021, the defendant allegedly used Opensea’s confidential information about which NFTs were to be featured on its homepage “to secretly purchase dozens of NFTs just before they were featured.” The DOJ added:
After these NFTs were presented at Opensea, Chastain sold them for a profit of two to five times their original purchase price.
As part of his tenure, Chastain was responsible for selecting NFTs to be featured on Opensea’s home page. “Opensea kept the identity of featured NFTs private until they appeared on its home page,” the DOJ said. “After an NFT was featured on the Opensea homepage, the price that buyers were willing to pay for that NFT and for other NFTs from the same NFT creator usually increased significantly.”
During the course of his fraudulent scheme, Chastain bought about 45 NFTs on about 11 separate occasions, court documents show.
US Attorney Damian Williams said:
Today’s indictments demonstrate the agency’s commitment to rooting out insider trading — whether it takes place on the exchange or on the blockchain.
The DOJ further stated, “To cover up the scam, Chastain conducted these purchases and sales using anonymous digital currency wallets and anonymous accounts on Opensea.”
According to the Ministry of Justice:
Chastain, 31, of New York, New York, faces one count of wire fraud and one count of money laundering, each carrying a maximum sentence of 20 years in prison.
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Kevin Helms
photo credit: Shutterstock, Pixabay, WikiCommons
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