In a case that could have seismic implications for the NFT and cryptocurrency sphere, a former product manager at OpenSea has been found guilty of money laundering and electronic fraud in federal court in New York on May 3.
This is the first major case of NFT insider trading with Nathaniel Chastain accused of leveraging his knowledge of NFTs allegedly featured on OpenSea’s homepage for financial gain. Between June and September 2021, Chastain earned around $57,000 buying dozens of NFTs, waiting for their value to increase through OpenSea’s promotion, then reselling them at “two to five times their original purchase price. “, the original indictment.
Chastain was forced to resign in September 2021 after allegations of his wrongdoings flooded social media. The US Attorney’s Office in Manhattan filed charges against him in June 2022.
Chastain’s attorneys claimed he did not violate OpenSea policies and was held to a standard that did not exist. “No one told Nate he couldn’t use or share this information,” Chastain’s attorney, Daniel Filor, told jurors.
In response, prosecutor Allison Nichols cited Chastain’s use of anonymous OpenSea accounts and wallets for purchases as evidence that “he knew he had violated OpenSea’s confidentiality agreement,” he said. she told the jury during their oral argument on May 1.
“While this case involved exchanges of new crypto assets, there was nothing particularly innovative about its conduct – it was fraud,” U.S. Attorney Damian Williams said in a statement. statement. “A jury has found Chastain guilty of using inside information for his own personal gain, and he now faces federal prison time.”
Chastain is due to be sentenced on August 22, 2023. Wire fraud and money laundering each carry a maximum sentence of 20 years in prison.
The case was the first in a series related to digital assets initiated by the US Attorney’s Office in Manhattan in 2022 and could set a precedent for an industry that has so far largely operated with little oversight or legal scrutiny.
At the time of Chastain’s dismissal, OpenSea, which is the largest NFT marketplace, said it was implementing new personnel guidelines. OpenSea did not respond to a request for comment at press time.
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