Beware of brave entrepreneurs online 3, Fed strikes at insider trading. Former OpenSea product manager Nate Chastain was arrested by the FBI early Wednesday morning in New York and charged with fraud and money laundering in a detailed NFT insider trading scheme. in Press releaseThe Justice Department claims that Chastain used his advanced and confidential knowledge of NFTs that would be published on the OpenSea platform to buy them in secret. Then sell it for up to five times its original value.
“In this case, Chastain reportedly launched a long-running insider trading engagement program, using his knowledge of classified information to pre-purchase dozens of NFTs to display on the OpenSea website,” wrote FBI Deputy Director Michael J. Driscoll.
According to the Justice Department, Chastain’s role at OpenSea was to choose which NFTs to display on the company’s website. Armed with their knowledge NFTs popped up, and then Chastain reportedly used several anonymous cryptocurrencies to buy and sell NFTs at a quick profit. Chastain’s plan allegedly took place between June and September Over the past year, this has included the purchase of dozens of NFTs. Chastain would have been sold NFT from 2 to ffive times Original purchase price.
“NFTs may be new, but this type of criminal scheme is not,” said U.S. Attorney Damien Williams. Apparently, Nathaniel Chastain betrayed OpenSea by using his confidential business information to make money for himself.
In an email to Gizmodo, an OpenSea spokesman said the company condemned Chastain’s behavior and terminated his employment after the investigation.
“As the world’s leading web3 marketplace for NFTs, trust and integrity are at the heart of everything we do,” the spokesman said. “When we heard about Nate’s behavior, we launched an investigation and eventually asked him to leave the company. His behavior was contrary to our hiring policies and in direct conflict with our core values and principles.”
Members of the NFT community started first wind draft From Chastain’s activity last fall. Twitter users claimed to have seen Chastain use a series of secret cryptocurrencies to buy NFTs from groups before it was released. Shortly afterwards, a Chinese cryptocurrency news platform claimed to have analyzed wallet activity, claiming that Chastain had stolen Ether (ETH) worth about $ 67,000 in the scheme.
OpenSea forced to admit fraud in public blog posts, even though they stopped mentioning Chastain by name at the time. Instead, OpenSea simply said that they “learned that one of our employees purchased items that they knew were made for display on our website before they were published.”
Unfortunately for OpenSea, corporate issues go beyond Chastain. The company was Lawsuit earlier this year by a Texas NFT user for $ 1 million for allegations that the company was responsible for the promotions Monkey stole NFT from his crypto wallet. In the same week, a hacker executed a file A phishing attack of OpenSea users and stole nearly $ 1.7 million in stolen NFTs.
For Chastain, the former product manager has to fight to avoid some heavy prison sentences. Chastain is charged with fraud and money laundering, each with a maximum sentence of 20 years. And while the U.S. federal government does not have a good reputation for holding insiders accountable in traditional finance, the Department of Justice has recently IndexDoctor It will be serious to crack down on cryptocurrency.