Home Arts Ex-OpenSea employee found guilty in first-ever NFT insider trading trial

Ex-OpenSea employee found guilty in first-ever NFT insider trading trial

by godlove4241
0 comment

On May 3, Nathanial Chastain, former product manager of the largest NFT (non-fungible token) marketplace, OpenSeawas found guilty of breaching confidentiality procedures in order to sell NFTs with inflated profits, bringing the very first insider trading trial on digital assets to an end. Chastain was found guilty of fraud and money laundering and is awaiting sentencing.

In his closing argument Monday, prosecutor Thomas Burnett said Chastain “abused his status at OpenSea to line his pockets, and he lied to cover his tracks,” according to Reuters.

Chastain helped determine which tokens featured prominently on the OpenSea website, which often led to asset price spikes. While OpenSea’s corporate policy was that featured tokens would not be released until they were live on the marketplace’s homepage, Chastain purchased the nominated tokens in bulk and sold them. sold after their identity was made public. His scheme netted more than $57,000 in profits and his use of anonymous accounts to conduct illegal transactions proved he knew what he was doing was wrong, the prosecution alleges.

“This case will send NFT marketplaces back to the drawing board in terms of compliance policies and procedures – the foundation of the fraud theory is that Chastain was breaching a duty of confidence to the source of his information,” says Philip Moustakis, lawyer and partner at Seward & Kissel. “NFT marketplaces are going to have to assess their risk in this regard and train their employees on the risk.”

Moustakis adds: “This fraud theory has never been applied to an asset class outside of securities or commodities before – it’s no surprise that someone like Chastain is caught off guard by this. that he has done.”

The charges against Chastain marked the first in a series of high-profile cases related to digital asset trading facilitated by the U.S. Attorney’s Office for the Southern District of New York in 2022.

“Nathaniel Chastain leveraged his advanced knowledge of NFTs that would be featured on the OpenSea website to make profitable trades for himself,” US attorney Damian Williams said in a statement. statement. “Although this case involved trading in new crypto assets, there was nothing particularly innovative about his conduct – it was fraud. A jury found Chastain guilty of using inside information for his own personal gain. , and he now faces federal prison time.”

You may also like

Leave a Comment

@2022 – All Right Reserved. Designed and Developed by artworlddaily