The U.S. Department of Justice (DOJ) has indicted an employee of non-fungible token (NFT) marketplace Opensea in what the department called the “first-ever digital asset insider trading scheme.”
DOJ Indicts Former Opensea Manager
The DOJ announced Wednesday the unsealing of an indictment charging Nathaniel Chastain, a former product manager at Ozone Networks Inc. (aka Opensea), in its “first-ever digital asset insider trading scheme.” Chastain was arrested Wednesday morning in New York.
The Justice Department explained that from June to September 2021, the defendant allegedly used Opensea’s confidential information about what NFTs were going to be featured on its homepage “to secretly purchase dozens of NFTs shortly before they were featured.” The DOJ added:
Chastain made a profit of the NFTs after they were shown on Opensea.
As part of his employment, Chastain was responsible for selecting NFTs to be featured on Opensea’s homepage. “Opensea kept confidential the identity of featured NFTs until they appeared on its homepage,” the DOJ detailed. “After an NFT was featured on Opensea’s homepage, the price buyers were willing to pay for that NFT, and for other NFTs made by the same NFT creator, typically increased substantially.”
Court documents reveal that Chastain bought 45 NFTs over the course of his fraud scheme on around 11 occasions.
U.S. Attorney Damian Williams stated:
Today’s charges demonstrate the commitment of this Office to stamping out insider trading — whether it occurs on the stock market or the blockchain.
The DOJ further detailed: “To conceal the fraud, Chastain conducted these purchases and sales using anonymous digital currency wallets and anonymous accounts on Opensea.”
The Justice Department says:
Chastain, 31 years of age, is facing one count each of wire fraud, and money laundering.
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