- Nathaniel Chastain, OpenSea’s former executive has been arrested and indicted by the FBI.
- It is the first time anyone has been charged by U.S. authorities in connection with an alleged insider trading operation on an NFT platform.
- Previously, Chastain bought NFTs from soon-to-be-featured artists and sold them at higher prices.
According to a press release from the U.S. Attorney’s Office in the Southern District of New York (SDNY), Nathaniel Chastain, a former OpenSea executive has been arrested and charged with wire fraud and money laundering in connection with an alleged insider trading operation on an NFT platform.
The shocking news was shared by Bender through a Twitter post:
Nate Chastain being arrested by the FBI should be a warning flag to every bad actor in the NFT space
I would hate to be those influencers who were openly promoting rug pulls for pennies now
— bender (@0xBender) June 1, 2022
Last September, Chastain was accused of front-running purchases of NFT collections that he already knew were about to be featured prominently on the homepage of OpenSea. Other NFT buyers who observed his transactions on the Ethereum blockchain discovered his actions.
He was soon fired by OpenSea after the allegations were confirmed to be legitimate. However, Chastain didn’t step back from being in the NFT community, especially on Twitter. Moreover, upon resignation from OpenSea, he founded a startup called Oval, an NFT platform that is designed to make discovering new creators easier.
At the time, Devin Finzer, CEO of OpenSea, wrote,
OpenSea team members may not buy or sell from collections or creators while we are featuring or promoting them. Employees are also now prohibited from buying or selling NFTs using confidential information, even if the NFT is being sold on different platforms.
OpenSea was recently valued at $13.3 billion by investors including Paradigm, Coatue and Andreessen Horowitz.
The Justice Department and SDNY U.S. Attorney’s Office are now extremely active in prosecuting crypto crimes, but the NFT space has largely evaded much action, which made the announcement a bit of a shock to those in the crypto space.
In a press release, U.S. Attorney Damian Williams, said:
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. Today’s charges demonstrate the commitment of this Office to stamping out insider trading — whether it occurs on the stock market or the blockchain.