Insider Trading Convictions Have Come to the World of NFTs
The case involves someone using their position at the marketplace OpenSea for illicit gains
Technology may change, but it turns out powerful people using inside information for illicit gains looks very similar across the ages. This week brings with it a milestone of sorts in the world of financial crime: a conviction that’s being described as the first of its kind involving NFTs.
As ARTnews reports, a former manager at the NFT marketplace OpenSea was recently convicted of insider trading. The article summarizes the actions of the former manager, one Nate Chastain, succinctly: Evidently he was buying up the work of artists who were set to be featured on OpenSea’s welcome page before they were put in the spotlight. This eventually led to Chastain’s resignation from the company, and his arrest by the FBI.
“Nathaniel Chastain exploited his advanced knowledge of which NFTs would be featured on OpenSea’s website to make profitable trades for himself,” said U.S. Attorney Damian Williams in a statement. “Although this case involved trades in novel crypto assets, there was nothing particularly innovative about his conduct — it was fraud. A jury has found that Chastain is guilty of using inside information for his own personal gain, and he now faces time in federal prison.”
As Blockworks reports, Chastain was found guilty of wire fraud and money laundering.
When Chastain was initially charged last year, the FBI issued stern comments about his actions. “With the emergence of any new investment tool, such as blockchain supported non-fungible tokens, there are those who will exploit vulnerabilities for their own gain,” FBI Assistant Director-in-Charge Michael J. Driscoll said in a statement. “The FBI will continue to aggressively pursue actors who choose to manipulate the market in this way.”
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