Nathaniel Chastain, the former Product Manager of OpenSea, has been indicted for ‘wire fraud’ and ‘money laundering’, making it the first ever federal case of ‘digital asset insider trading’.
In essence, Chastain’s wrongdoings stem from his high-up position at the NFT marketplace, as he used inside knowledge to purchase NFTs from collections which he knew would be featured on the platform’s homepage. From here, he was able to sell assets for a hefty profit after they had experienced this significant marketing exposure.
Chastain resigned after his fraudulences were revealed last year, however it was unclear as to whether he would ever be punished given the unregulated nature of the NFT space.
Of course, his arrest suggests that justice will in-fact be served. Michael J. Driscoll, the FBI Assistant Director in charge of the case, stated that the agency has the intent to “aggressively pursue” people who attempt to manipulate the market of NFTs using the “age-old scheme” of insider trading. That being said, the NFT realm’s infant relationship with the federal law means Chastain’s punishment remains ambiguous for now.
In wake of such revelations, OpenSea has been quick to denounce its former employee. OpenSea stated that “this behaviour does not represent our values as a team”. In addition, the platform has also implemented a new policy which restricts employees from buying or selling NFTs from ‘featured’ collections, and it has also reinforced its zero-tolerance policy with regards to revealing confidential information to outsiders.
