A former OpenSea boss has been convicted in the first major NFT insider trading case
Law
Nathaniel Chastain now faces up to 20 years in federal prison.
In a case that could have seismic implications for the NFT and cryptocurrency sphere, a former OpenSea product manager was convicted of money laundering and fraud in New York Federal Court on May 3.
It is the first major NFT insider trading case with Nathaniel Chastain accused of exploiting his knowledge of which NFTs would be listed on OpenSea’s website for financial gain. Between June and September 2021, Chastain earned about $57,000 by buying dozens of NFTs, waiting for their value to rise on the back of OpenSea’s campaign, and then selling them — at “two to five times his original purchase price,” the original . indictment charged.
Chastain was forced to resign in September 2021 after allegations of his wrongdoing flooded social media. The US attorney’s office in Manhattan filed charges against him in June 2022.
Chastain’s lawyers argued that he had not violated OpenSea’s policies and was held to a standard that did not exist. “Nobody told Nate he couldn’t use or share that information,” Chastain’s attorney Daniel Filor told jurors.
In response, prosecutor Allison Nichols cited Chastain’s use of anonymous OpenSea accounts and wallets for the purchases as evidence that “he knew he had violated OpenSea’s confidentiality agreement,” she told the jury in closing arguments May 1.
“Although this case involved the trading of new cryptoassets, there was nothing particularly innovative about his conduct — it was fraud,” US Attorney Damian Williams said in a statement. “A jury has found Chastain guilty of using inside information for his own personal gain, and he now faces time in federal prison.”
Chastain is scheduled to be sentenced on August 22, 2023. Bank fraud and money laundering each carry a maximum sentence of 20 years in prison.
The case was the first in a series related to digital assets initiated by the U.S. attorney’s office in Manhattan in 2022 and could set a precedent for a sector that to date has largely operated with little oversight or legal scrutiny.
At the time of Chastain’s resignation, OpenSea, which is the largest NFT marketplace, said it was implementing new staffing policies. OpenSea did not respond to a request for comment at press time.
More trending stories:
A museum has renamed a vegetable still life by Van Gogh after a chef discovered there was something wrong with the onions
An X-ray scan of a 16th-century bronzino painting of Duke Cosimo de’ Medici has revealed a mysterious underlying portrait
‘He Was Hungry’: Korean art student plucked Maurizio Cattelan’s infamous $150,000 banana from a museum wall and ate it
Art Industry News: Rare Blue Diamond Priyanka Chopra Jonas Showed Off at Met Gala Could Bring $25M at Auction + Other Stories
A low-key collector kept 230 classic cars hidden in a dusty old church. The Astonishing Trove could fetch millions at auction
Christie’s neglected to reveal the ugly story behind the sensational planned jewelery auction. Then a billionaire’s wife complained
See the rare Keith Haring drawing – measuring a massive 125ft – on display in Amsterdam for the first time in 30 years
How Lavinia Fontana broke Renaissance tradition to become the first female artist known to depict female nudes – and earn equal pay to men
Florida Principal Fired For Allowing A Lesson On Michelangelo’s ‘David’ Went To Italy To See The Sculpture For Herself – She Was Impressed
Are you considering a job in the art world? Here’s how much art professionals actually make for a living
Follow Artnet News on Facebook:
Do you want to be at the forefront of the art world? Subscribe to our newsletter to get the latest news, eye-opening interviews and sharp critiques that drive the conversation forward.
