OpenSea Employee Accused of Alleged Insider Trading in NFT

Image from article titled Ex-OpenSea Product Manager Arrested and Charged in Alleged NFT Insider Trading

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Beware of daring entrepreneurs on the Internet 3, the FBI is cracking down on insider trading. Former OpenSea product manager Nate Chastain was arrested early Wednesday morning in New York by the FBI and charged with wire transfer fraud and money laundering in a detailed NFT insider trading system. in press releasethe Justice Department alleges that Chastain used his sophisticated and confidential knowledge of NFTs that would be posted on the OpenSea platform to secretly buy them. Then sell it for up to five times its original value.

“In this case, Chastain allegedly launched a long-running insider trading program by using his knowledge of classified information to pre-purchase dozens of NFTs for display on the OpenSea homepage,” wrote FBI Deputy Director Michael J. Driscoll.

According to the Justice Department, Chastain’s role at OpenSea was to choose which NFTs to display on the company’s home page. Armed with their knowledge NFTs arose and then Chastain is said to have used several anonymous crypto wallets to buy and sell NFTs for a quick profit. Chastain’s plan is said to have taken place between June and September In the past year, this included buying dozens of NFTs. Chastain would be sold NFT from 2 to ffive times Original purchase price.

“NFTs may be new, but these kinds of criminal schemes are not,” said US attorney Damien Williams. Apparently Nathaniel Chastain betrayed OpenSea by using his confidential company information to make money for himself.

In an email to Gizmodo, an OpenSea spokesperson said the company condemned Chastain’s behavior and terminated his employment following the investigation.

“As the world’s leading Web3 marketplace for NFTs, trust and integrity are at the heart of everything we do,” the spokesperson said. “When we heard about Nate’s behaviour, we launched an investigation and eventually asked him to leave the company. His conduct was contrary to our employment policies and in direct conflict with our core values ​​and principles.”

Members of the NFT community started first wind draft Van Chastain’s activity last fall. Twitter users claimed that they had seen Chastain use a number of secret crypto wallets to buy NFTs from groups before it was published. Shortly afterwards, a Chinese crypto news platform claimed to have analyzed wallet activity and claimed that Chastain had stolen about $67,000 worth of Ether (ETH) in the scheme.

OpenSea forced to admit cheating in public blog post, although they stopped calling Chastain by name at the time. Instead, OpenSea simply said they “heard that one of our employees was purchasing items that they knew were made to feature on our homepage before being made public.”

Unfortunately for OpenSea, the companies’ problems extend beyond Chastain. The company was Lawsuit earlier this year by a Texas NFT user for $1 million over allegations that the company was responsible for the promotions Ape stole NFT from his crypto wallet. In the same week, a hacker executed a file A phishing attack from OpenSea users and stole nearly $1.7 million in stolen NFTs.

For Chastain, the former product manager will have to fight to avoid some hefty jail terms. Chastain is charged with wire transfer fraud and one money laundering charge, each with a maximum sentence of 20 years. And while the U.S. federal government doesn’t have a good record of holding insiders accountable in traditional finance, the Department of Justice recently IndexDoctor It’s getting serious about tackling crypto crime.

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