Ex-OpenSea employee receives prison sentence for NFT insider trading

Former OpenSea employee Nathanial Chastain has been sentenced to three months in prison over an NFT (non-fungible token) insider trading scheme. Chastain, who was found guilty of wire fraud and money laundering, used "confidential information about which NFTs were going to be featured on OpenSea’s homepage for his personal financial gain," according to the US Attorney's Office for the Southern District of New York.

Back in 2021, an X (then known as Twitter) user claimed that Chastain was buying NFT drops before the public could get their hands on the digital items. Chastain, who selected which NFTs would appear on OpenSea's homepage, was accused of selling the tokens he bought in advance for a profit after they became broadly available and interest in them soared. OpenSea admitted that Chastain had carried out such a scheme and said it would ban employees from using confidential information to trade NFTs.

The incident caught the attention of federal prosecutors, who treated the case in a similar fashion to regular insider trading. The US Attorney's Office noted that Chastain sold the NFTs for between two and five times the original purchase price.

Along with his prison sentence, Chastain must serve three months of home confinement and three years of supervised release. He also needs to pay a $50,000 fine and forfeit the Ethereum he obtained from his illicit NFT trading.

"Nathanial Chastain faced justice today for violating the trust that his employer placed in him by using OpenSea’s confidential information for his own profit," US attorney Damian Williams said in a statement. "Today’s sentence should serve as a warning to other corporate insiders that insider trading — in any marketplace — will not be tolerated.”

This article originally appeared on Engadget at https://www.engadget.com/ex-opensea-employee-receives-prison-sentence-for-nft-insider-trading-153628983.html?src=rss