He used first-hand information to enrich himself. Nathaniel Chastain, former chief product officer of NFT auction platform OpenSea, has been charged in an insider trading case, an industry first, the US Department of Justice announced.
Nathaniel Chastain is accused by the FBI of using confidential information to buy dozens of NFTs before they were published on the front page on OpenSea, for his own financial gain.
He was arrested on Wednesday in New York, but, according to several American media, he was released after posting $100,000 bail.
NFTs, land of speculation
NFTs are digital objects certified unique and tamper-proof by “blockchain” technology, the market of which exploded in 2021, generating 44.2 billion dollars according to the specialized firm Chainalysis.
These new assets, whose value is difficult to establish and which are traded on deregulated platforms, have a strong speculative dimension.
“Nathaniel Chastain betrayed OpenSea,” prosecutor Damian Williams said in a statement, adding that “NFTs may be new,” but “this type of criminal scheme is not.” On the other hand, it is the first time that an executive in the sector has been brought to justice.
Nathaniel Chastain was “responsible for the selection of NFTs displayed on the OpenSea homepage”, specified the American Department of Justice, explaining that the NFTs thus put forward saw their price “increase substantially”.
“Incredibly disappointing” behavior
The former OpenSea employee would have taken advantage of this assembly from June to September 2021 and resold the NFTs acquired upstream for “two to five times” their initial price, using anonymous accounts.
On September 16, 2021, the day after the first accusations, OpenSea announced that it had “requested and accepted” the resignation of Nathaniel Chastain, judging that his “incredibly disappointing” behavior had “violated” the platform’s rules of conduct.
Aged 31, Nathaniel Chastain faces 20 years in prison for “electronic fraud”, and the same sentence for “money laundering”. He pleaded not guilty.