The United States Department of Justice (DOJ) has charged Nathaniel Chastain, a former employee at NFT marketplace OpenSea, for wire fraud and money laundering involving insider trading in non-fungible tokens (NFTs). The department noted that this is its first insider trading indictment involving digital assets.
DOJ Indicts Ex-OpenSea Employee for Insider Trading
In an official press release, the DOJ said the defendant was arrested in the early hours of Wednesday. The department alleges that Chastain took advantage of his employment role in OpenSea to commit the crime by leaking confidential information on what NFTs were about to feature on the platform’s website before they were officially released.
For his personal financial gains, between June and September 2021, the defendant acquired a large number of the NFTs before they were listed on OpenSea.
After the launch of the NFTs on OpenSea, Chastain then sold his, receiving proceeds of two to five times the amount he initially purchased the assets. The defendant allegedly used anonymous crypto wallets and OpenSea accounts to obfuscate his transactions,
“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,” FBI Assistant Director-in-Charge Michael J. Driscoll said.
OpenSea Investigates Insider Trading
U.S. Attorney Damian Williams said the charge shows the department’s efforts toward tackling insider trading involving stock markets and digital assets.
If found guilty, the 31-year-old man risks 20 years of jail time. However, his sentencing is to be determined by the assigned judge.
It is worth noting that in September 2021, OpenSea announced it was conducting insider trading violations on the defendant and relieved him of his role in the firm.
Insider Trading in Crypto
Meanwhile, this will not be the first insider trading case involving crypto. In 2018, leading crypto exchange Coinbase faced a negligence lawsuit from customers over an alleged Bitcoin Cash (BCH) insider trading scheme.
A recent report by the Wall Street Journal (WSJ) suggests that insider trading schemes are becoming very popular. The report found that numerous crypto investors profited from inside knowledge of when exchanges will list tokens.
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