- A federal jury in New York has convicted former OpenSea product manager Nate Chastain for insider trading.
- Chastain has been found guilty of wire fraud and money laundering.
- The former OpenSea executive faces up to 40 years in prison for his NFT insider trading scheme.
A federal jury in New York has convicted former OpenSea executive Nate Christian for perpetrating what has been described as the first NFT insider trading case. The U.S. Attorney’s Office for the Southern District of New York charged Chastain with wire fraud and money laundering in June last year in connection with his scheme to commit insider trading of NFTs.
According to a report by Reuters, the federal jury found Nate Chastain guilty of wire fraud and money laundering earlier today. The guilty verdict comes less than two weeks after the Manhattan court held its first hearing in the case. The five-day trial saw the former OpenSea executive’s lawyers square off with federal prosecutors, ultimately leading to his conviction.
The lawsuit filed by the U.S. Department of Justice accused Nate Chastain of abusing his role as the head of product at OpenSea, to exploit confidential knowledge for personal gains. As the product manager, Chastain’s role involved selecting the digital artworks that would be featured on the NFT marketplace’s homepage.
Federal prosecutors alleged that between June 2021 and September 2021, Chaitain used insider information to purchase NFTs ahead of their listing on OpenSea’s homepage. Once listed, the NFTs would see a surge in price, following which Chastain would sell them for a significant profit. As per the prosecutors, he made more than $50,000 from this insider trading scheme.
Chastain’s lawyers had entered a motion to dismiss the lawsuit last month, arguing that no policies or guidance at OpenSea prohibited the former executive from buying the NFTs. Prosecutors responded by highlighting Chastain’s attempts to cover his tracks by using anonymous wallets and accounts, arguing that he knew he had violated company rules.
“Nathaniel Chastain exploited his advanced knowledge of which NFTs would be featured on OpenSea’s website to make profitable trades for himself. Although this case involved trades in novel crypto assets, there was nothing particularly innovative about his conduct — it was fraud,” stated Damian Williams, the U.S. Attorney for the Southern District of New York.