OpenSea Comments on Insider Trading of NFTs

This past week it was reported that the US Department of Justice had arrested and charged a former OpenSea employee with insider trading of NFTs or non-fungible tokens. The individual in question, Nathanial Chastain,  has been charged with wire fraud, and money laundering as he took advantage of confidential information about which NFTs were scheduled to be featured on the OpenSea home page for personal benefit. The ploy reportedly generated 2X to 6X in personal financial gain for Chastain.

Of note is the fact that insider trading is typically associated with securities. An NFT is (most likely) not a security but this did not stop the Feds from pursuing the allegedly illicit transactions.

Following the news, an OpenSea spokesperson shared a comment with CI on Chastain’s arrest:

“As the world’s leading Web3 marketplace for NFTs, trust, and integrity are core to everything we do. When we learned of Nate’s behavior, we initiated an investigation and ultimately asked him to leave the company. His behavior was in violation of our employee policies and in direct conflict with our core values and principles.”

Michael J. Driscoll, FBI Assistant Director-in-Charge, issued a statement upon release of the indictment noting that with the emergence of any new investment tool 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.”

You can expect more, similar cases emanating from the DOJ as well as enforcement actions from securities regulators.

Sponsored Links by DQ Promote



Send this to a friend