FBI Arrests OpenSea’s Former Head of Product
Former OpenSea product manager Nate Chastain was arrested by the FBI and charged with wire fraud and money laundering in connection with an elaborate NFT insider trading scheme. The decision comes nearly eight months after OpenSea discovered Chastain's insider trading scheme.
According to the press release, Chastain used his advanced, confidential knowledge of which NFTs would be featured on OpenSea's platform in order to buy them secretly and then sell them for up to five times their original value.
FBI Assistant Director-in-Charge Michael J. Driscoll wrote :
“In this case, as alleged, Chastain launched an age-old scheme to commit insider trading by using his knowledge of confidential information to purchase dozens of NFTs in advance of them being featured on OpenSea’s homepage.”
Furthermore, Chastain allegedly used several anonymous crypto wallets to purchase the NFTs and sell them for profits after determining which NFTs would feature on the platform's main page. Chastain's alleged scheme took place between June and September of last year, and it included the purchase of dozens of NFTs.
Driscoll also stated :
“With the emergence of any new investment tool, such as blockchain-supported non-fungible tokens, there are those who will exploit vulnerabilities for their own gain. The FBI will continue to aggressively pursue actors who choose to manipulate the market in this way,”
The former employee was brought before the US District Court for the Southern District of New York. Chastain, who resigned shortly after the insider trading scheme was reported, could be sentenced to up to 20 years in prison. Meanwhile, the OpenSea marketplace remains operational.