2 Jun, 2022
1 min time to read

Prosecutors in the Southern District of New York have charged and arrested Nathaniel Chastain, a former product manager at online marketplace OpenSea. He is charged with one count of fraud and money laundering in connection with an NFT insider trading scheme, ‘using confidential information about which NFTs would be featured on the OpenSea homepage for personal financial gain.’ Each count carries a maximum penalty of 20 years in prison.

According to the indictment, from around June to September 2021, he would secretly buy NFTs just before OpenSea posted it on the home page of its website. Once these NFTs hit the homepage, he allegedly sold them at a profit of two to five times his original purchase price. He tried to hide the transactions by using anonymous wallets and accounts.

After this incident, the company introduced two rules for employees. Members of the OpenSea team are not allowed to buy or sell collections or creators while they are represented or promoted by the company, and employees may not use confidential information to buy or sell any NMTs, whether available on the OpenSea platform or not.