Ex-OpenSea boss convicted in NFT case of insider trading

NEW YORK, May 3 (Reuters) – A former product manager at non-fungible token (NFT) marketplace OpenSea was convicted of fraud and money laundering on Wednesday for using inside knowledge about which assets would be featured on the website to trade NFTs.

Nathaniel Chastain was accused of buying NFTs he had decided to display on the OpenSea website and selling them shortly after to make more than $50,000 in illegal profits, in what federal prosecutors in Manhattan described as the first the insider trading case involving digital assets.

“Although this case involved the trading of new cryptoassets, there was nothing particularly innovative about his conduct — it was fraud,” Damian Williams, the U.S. attorney in Manhattan, said in a statement.

The charges against Chastain, announced last June, were the first in a series of high-profile cases related to digital assets launched by Williams’ office last year.

The case could have broader implications for assets that don’t fit under existing regulations that prevent investment advisers, brokers and others from acting on material non-public information, legal experts have said.

Chastain had pleaded not guilty. His lawyer, David Miller, said after the verdict that the legal team would “consider our options”.

“We respect the jury process. We respectfully disagree with their decision,” Miller told reporters.

Chastain’s lawyers argued that OpenSea, the world’s largest NFT marketplace, did not treat knowledge of which NFTs would be featured on its website as confidential information when Chastain worked at the company.

“You can’t hold Nate to a standard that didn’t exist,” his attorney Daniel Filor told jurors in his closing arguments Monday. “Nobody told Nate he couldn’t use or share that information.”

Prosecutor Allison Nichols said Chastain used anonymous OpenSea accounts to make the illegal trades, showing he knew what he was doing was wrong.

“He hid what he did,” Nichols told the jury in her rebuttal argument. “He knew he had breached OpenSea’s confidentiality agreement.”

U.S. District Judge Jesse Furman, who presided over the trial, set the Chastains’ sentencing date for August 22.

Reporting by Luc Cohen in New York Editing by Matthew Lewis

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