A former OpenSea employee has been charged with insider trading by the FBI. Insider trading is one of the oldest and most pervasive white-collar crimes in existence, making this arrest one of the first instances of conventional laws being applied to punish bad actors in the NFT space.
The nature of the crime
Earlier this morning, former OpenSea product manager Nathaniel Chastain was arrested in the city of New York for allegedly using confidential knowledge gained from his post working for the marketplace to his advantage. Specifically, he’s been charged with wire fraud and money laundering, which have been linked to said scheme.
As stated by FBI Assistant Director-in-Charge Michael J. Driscoll, Chastain “[used] his knowledge of confidential information to purchase dozens of NFTs in advance of them being featured on OpenSea’s homepage.”
In fact, Chastain wasn’t just aware of what NFTs would end up featured on OpenSea’s marketplace. He was in charge of selecting what NFTs would end up featured on the site’s homepage, as per his responsibilities working as a product manager for the website.
This gave him the unique opportunity to directly manipulate the market if he would choose to do so. And he did. Typically, once an NFT gets featured on OpenSea’s homepage, it sees a substantial increase in price, giving Chastain an unfair advantage in the trading market.
This is a developing story and will be updated.
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