Disgraced OpenSea Engineer Arrested for Insider Trading

Former OpenSea product manager Nathaniel Chastain has been charged with wire transfer fraud and money laundering related to insider trading. Chastain was arrested Wednesday morning in New York City and is expected to appear in court later in the day.

Chastain was publicly charged with insider trading in September and was fired from his position at OpenSea — but today’s indictment marks the first criminal charges related to the settlement.

While at OpenSea, Chastain was responsible for deciding which NFT collections would make the front page of OpenSea, a distinction that typically made the collections skyrocket in value. The indictment describes a pattern of 45 token purchases on 11 separate occasions. In both cases, Chastain bought NFTs shortly before they appeared on the OpenSea homepage, sometimes just minutes before. According to prosecutors, Chastain sold the tokens for “between two and five times its purchase price”.

“NFTs may be new, but these kinds of criminal schemes are not,” New York Southern District Attorney Damian Williams said in a statement. “Today’s allegations demonstrate this agency’s commitment to eradicating insider trading – whether it be in the stock market or the blockchain.”

As part of the indictment, Chastain must forfeit all money that can be traced to the proceeds of the settlement.

The investigation was led by the FBI’s National Cryptocurrency Enforcement Team (NCET), apparently without the involvement of the Securities and Exchange Commission, which typically takes the lead in insider trading cases. The SEC recently doubled its cryptocurrency enforcement workforce, citing a plethora of fraud in the market.

As the largest marketplace for NFTs, OpenSea plays a pivotal role in both purchasing and marketing tokens. As a result, scammers often pose as OpenSea employees to steal tokens, and the recovery of stolen goods often relies on centralized enforcement by the company.

OpenSea did not immediately respond to a request for comment.

Frank Broholm had acquired considerable experience in writing and editing publications before recruited by The Media Today Chronicle News portal as Editorial Manager. His key task is to conduct effective business reviews based on the most recent business…