NFT insider trading scheme charges are a 1st, feds say

Jun 1, 2022, 1:28 PM | Updated: 1:53 pm

NEW YORK (AP) — A former product manager at an online marketplace was arrested Wednesday in what federal authorities called the first ever digital asset insider trading scheme involving NFTs.

Nathaniel Chastain, a former employee of a company that does business as OpenSea, was arrested in Manhattan. He was later released on $100,000 bail after entering a not guilty plea to wire fraud and money laundering charges.

Chastain, 31, and his lawyers declined comment immediately after the Manhattan federal court hearing.

U.S. Attorney Damian Williams said the charges were a first because they pertained to NFTs, or non-fungible tokens, that provide digital ownership of art and other content.

Michael J. Driscoll, head of New York’s FBI office, said Chastain used his knowledge of confidential information to buy dozens of NFTs in advance of them being featured on OpenSea’s homepage. OpenSea is the largest online marketplace for the purchase and sale of NFTs, authorities noted.

Driscoll said the emergence of any new investment tool such as “blockchain supported non-fungible tokens” will lead some to exploit its vulnerabilities for illegal profits.

“NFTs might be new, but this type of criminal scheme is not,” Williams said. “Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself. Today’s charges demonstrate the commitment of this Office to stamping out insider trading — whether it occurs on the stock market or the blockchain.”

Chastain, as part of his job, was responsible for selecting NFTs to be featured on OpenSea’s homepage, authorities said. They added that price buyers were usually willing to pay more for an NFT once it was featured on OpenSea’s homepage, enabling Chastain to sell them at two- to five-times his initial purchase price.

He concealed the fraud by conducting the purchases and sales through anonymous digital currency wallets and anonymous accounts at OpenSea, authorities said.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

(Facebook Photo/Superior Court of Arizona in Yavapai County)...
Associated Press

Arizona judge has cases reassigned following DUI arrest

The Arizona Supreme Court has ruled that all cases currently assigned to a Yavapai County Superior Court judge recently arrested on suspicion of extreme DUI will be reassigned to other judges.
24 hours ago
Haitian migrant Gerson Solay, 28, carries his daughter, Bianca, as he and his family cross into Can...
Associated Press

US, Canada to end loophole that allows asylum-seekers to move between countries

President Joe Biden and Canadian Prime Minister Justin Trudeau on Friday announced a plan to close a loophole to an immigration agreement.
4 days ago
Expert skateboarder Di'Orr Greenwood, an artist born and raised in the Navajo Nation in Arizona and...
Associated Press

Indigenous skateboard art featured on new stamps unveiled at Phoenix skate park

The Postal Service unveiled the “Art of the Skateboard" stamps at a Phoenix skate park, featuring designs from Indigenous artists.
4 days ago
(Facebook Photo/City of San Luis, Arizona)...
Associated Press

San Luis authorities receive complaints about 911 calls going across border

Authorities in San Luis say they are receiving more complaints about 911 calls mistakenly going across the border.
10 days ago
(Pexels Photo)...
Associated Press

Daylight saving time begins in most of US this weekend

No time change is observed in Hawaii, most of Arizona, Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam and the Northern Marianas.
18 days ago
Mexican army soldiers prepare a search mission for four U.S. citizens kidnapped by gunmen in Matamo...
Associated Press

How the 4 abducted Americans in Mexico were located

The anonymous tip that led Mexican authorities to a remote shack where four abducted Americans were held described armed men and blindfolds.
18 days ago

Sponsored Articles

(Desert Institute for Spine Care in Arizona Photo)...
Desert Institute for Spine Care in Arizona

5 common causes for chronic neck pain

Neck pain can debilitate one’s daily routine, yet 80% of people experience it in their lives and 20%-50% deal with it annually.
...
Day & Night Air Conditioning, Heating and Plumbing

Company looking for oldest air conditioner and wants to reward homeowner with new one

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.
(Desert Institute for Spine Care photo)...
DESERT INSTITUTE FOR SPINE CARE

Why DISC is world renowned for back and neck pain treatments

Fifty percent of Americans and 90% of people at least 50 years old have some level of degenerative disc disease.
NFT insider trading scheme charges are a 1st, feds say