Former NFT Manager Indicted in First Ever Insider Trading Scheme Involving Digital Assets

The United States Department of Justice (DOJ) has charged a former employee of non-fungible token (NFT) marketplace Opensea with the “First-ever digital asset insider trading scheme.”

Prosecutors of the US Attorney’s Office for the Southern District of New York charged Nathaniel Chastain, a former product manager at OpenSea, with one count of wire fraud and one count of money laundering in connection with the acquisition and sale of NFTs.

Court documents show that Chastain exploited Opensea’s proprietary knowledge about which NFTs would be featured on its homepage “to secretly purchase dozens of NFTs shortly before they were featured” from June to September 2021.

Chastain then allegedly sold the NFTs for “two to five times his initial purchase price,” and concealed the scam by using anonymous digital currency wallets and anonymous OpenSea accounts.

“NFTs might be new, but this type of criminal scheme is not. As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself,” said US Attorney Damian Williams.

NFTs are virtual artworks or valuables that establish ownership and individuality using blockchain technology and have grown increasingly popular in recent years.

According to Yahoo Finance, the average cost of an NFT on OpenSea costs around $500.

The Federal Bureau of Investigation (FBI)’s Assistant Director-in-Charge Michael J. Driscoll, warned that “The FBI will continue to aggressively pursue actors who choose to manipulate the market in this way.”

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