The U.S. Department of Justice (DOJ) has indicted an employee of the nonfinancial token (NFT) marketplace Opensea in what the agency called “the first ever digital asset insider trading scheme.”
DOJ indicted a former product manager at Opensea
The DOJ on Wednesday announced the unsealing of an indictment charging Nathaniel Chastain, former product manager at Ozone Networks Inc. (aka Opensea), with the “first ever digital asset insider trading scheme.” Chastain was arrested Wednesday morning in New York City.
The DOJ explained that between June and September 2021, the defendants allegedly used confidential information from Oppensea about which NFTs would be featured on the website to “secretly purchase dozens of NFTs just before they were introduced.” The DOJ added:
After these NFTs were introduced at OpenSea, Chastain sold them at a profit of two to five times the initial purchase price.
As part of his employment, Chastain was responsible for selecting the NFTs to be featured on the OpenSea homepage. The DOJ detailed that “OpenSea kept the identities of the NFTs listed on its homepage confidential until they were posted on the homepage.” After an NFT was featured on the OpenSea homepage, the price buyers were willing to pay for that NFT and other NFTs made by the same NFT creator typically increased significantly.”
According to court documents, in the course of the fraudulent scheme, Chastain purchased approximately 45 NFTs on approximately 11 separate occasions.
U.S. Attorney Damian Williams opined.
Today’s accusations demonstrate the Agency’s commitment to root out insider trading, whether it occurs in the stock market or the blockchain.
The DOJ further elaborated.” To conceal the fraud, Chastain used an anonymous digital currency wallet and an anonymous account at Opena to make these purchases and sales.”
According to the DOJ,
Chastain, 31, of New York, NY, is charged with one count of wire fraud and one count of money laundering, each carrying a maximum penalty of 20 years in prison.
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