The U.S. Attorney’s Office for the Southern District of New York has issued a statement that Nate Chastain was arrested on June 1 in New York City.
The 31-year-old faces one count of wire fraud and one count of money laundering, in connection with a scheme to commit insider trading in non-fungible tokens, or NFTs, “using confidential information about what NFTs were going to be featured on OpenSea’s homepage for his personal financial gain.
Nate Chastain, the former head of product at OpenSea, left under a cloud after it was discovered that he purchased NFTs before they were featured on his former employer’s homepage and subsequently sold them as the increased exposure led to higher prices.
“NFTs might be new, but this type of criminal scheme is not,” said U.S. Attorney Damian Williams. “Today’s charges demonstrate the commitment of this Office to stamping out insider trading — whether it occurs on the stock market or the blockchain.”
The FBI’s Assistant Director-in-Charge Michael J. Driscoll says the bureau will continue to aggressively pursue actors who choose to manipulate the market in this way.
The arrest indicates that NFTs, and perhaps crypto as a whole, are increasingly in the sights of U.S. regulators. The crypto space is no stranger to scams and bad actors — it’s called the “wild west” after all. Projects like ******* rode insane hype to raise $70M only to implode upon the reveal of the project’s NFTs.
Though the charges concern NFTs specifically, it's notable that the DOJ is coining it as the first insider trading charge in digital assets generally. Outside of NFTs, project insiders frequently profit by selling tokens to retail investors who enter after them. It's the first example of such charges, but may not be the last.
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