Nathaniel Chastain, former OpenSea product manager, was charged with electronic fraud and money laundering related to the purchase and sale of non-consumable (NFT) tokens, prosecutors at the U.S. Attorney’s Office for the Southern District of New York said in a statement. The charges come from an apparent scheme to allegedly commit insider trading “by using confidential information about which NFTs would be displayed on the OpenSea homepage for your personal financial benefit,” the statement added. .
“NFTs may be new, but this kind of criminal scheme is not,” said Damian Williams, the U.S. Attorney for the Southern District of New York.
Chastain, 31, was responsible for selecting the NFTs that will be displayed on the OpenSea homepage as part of his job, prosecutors said. The price that buyers were willing to pay for an NFT, or those made by the creator himself, usually increased substantially after appearing on the OpenSea homepage.
NFTs are digital works of art or collectibles that use blockchain technology to demonstrate ownership and individuality. Although NFTs have grown in popularity in recent years, their main appearance has also been affected by a number of controversies.
Chastain allegedly used Confidential OpenSea’s trade information to secretly buy dozens of NFTs shortly before they appeared. He then allegedly sold them at a profit of “two to five times their initial purchase price,” authorities said, and used anonymous digital wallets and anonymous accounts on OpenSea to “hide the fraud.”
Chastain was arrested Wednesday morning in New York, the statement added. He did not immediately respond to a request for feedback from CNN Business. OpenSea told CNN Business in a statement that it began an investigation and eventually asked Chastain to leave the company. “Their behavior violated the policies of our employees and came into direct conflict with our core values and principles,” the company added.
“As alleged, Nathaniel Chastain betrayed OpenSea by using his confidential business information to make money for himself,” Williams said, adding that the charges demonstrate his office’s commitment to “eliminate insider trading.” , whether it occurs in the stock market or in the blockchain “. . “