Nathaniel Chastain, former product manager for OpenSea, was charged and arrested in southern New York on Wednesday. The 31-year-old is accused of one count of embezzlement and one of money laundering in connection with a plan to conduct insider trading (NFT) by “using private information about which NFTs would be promoted on the OpenSea Website for his personal financial gain.”
According to a press release from the Ministry of Justice, each offense could be punishable by up to 20 years in prison.
According to DOJ officials, this is the first time the DOJ has asked for an insider trading fee that includes
Chastain’s plan was clear
According to the indictment, Chastain was accused of choosing NFT to publish on the OpenSea website. Because the placement of the main page usually led to a price increase for both identified NFTs and other NFTs made by the same developer, OpenSea kept these website options hidden until it was vibrant.
According to the indictment, Chastain would secretly buy NFT between June and September 2021, just before OpenSea published the artwork on its website. He seems to have sold these NFTs for two to five times his initial investment after they reached the top.
According to the DOJ, he said he had done business dozens of times using anonymous digital currency wallets and anonymous IDs on OpenSea to hide his songs.
“While NFTs are unique, it is not such a crime,” said Damien Williams, the US Attorney General. “The indictments of the day show the office’s decision to eliminate insider trading, whether on the stock market or the blockchain.”
FBI Deputy Chief of Staff Michael J. Driscoll said the agency will continue to crack down on market abuse.
Prior to September 2021, when Chastin’s alleged illegal actions were first disclosed, the start-up restrictions on employees’ access to sensitive information to invest in NFTs were relatively relaxed.
Since then, the company has implemented two new employee policies, one of which prohibits OpenSea members from buying or selling from museums or authors while they are being shown or presented by the company, and the other prohibiting employees from “using confidential information to buy or sell any NFT.” , whether or not they are available on the OpenSea platform.
The whole issue shows a regular vacuum that covers a large part of the broader cryptocurrency economy. NFTs, in particular, operate in a legal gray area. Digital assets are technically not classified as securities and there is a limited legal precedent for them in general. Prior to today’s arrest, it was unclear whether the authorities would conduct NFT insider trading.
According to Boaz Sobrado, a data specialist at a fintech company in London, OpenSea underlines two issues. First, since all transactions are public and perpetually recorded, the blockchain is a powerful tool for monitoring illegal activities. Prior to today’s arrest, however, the authorities had not acted on this information.
“There is a lot of discussion about regulation right now, but a lot of these bad people are breaking the law. According to Sobrado, the authorities do not need more power to combat this type of fraud and misrepresentation.
According to Sobrado, there is so much money in the neighborhood that thieves ignore the basic steps to hide their tracks.
“Once again, this shows what kind of irresponsible madness is now spreading in the sector,” he added. While the economy is booming and everyone is experiencing prosperity, it is not much discussed. However, as the market turns, many of these people will be exposed and many will be upset.
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