- Former OpenSea employee Nate Chastain has been arrested on money laundering and wire fraud charges
- Chastain allegedly bought NFTs on the site and sold them when they hit the front page, making huge profits
- Chastain left OpenSea quit shortly after he was rumbled in September last year
Nate Chastain, the former OpenSea employee who bought NFTs before they were advertised by the site, has been arrested and charged with money laundering and wire fraud. Chastain, who quit his role in September 2021 after a Twitter user spotted his activities, is the first person to be charged with insider trading of digital assets, with the two crimes each carrying a maximum term of 20 years in prison.
Chastain Quit Before He Could Be Fired
Chasiatin’s activities were highlighted in September 2021 when Twitter user @0xZuwu discovered that Chastain had secret wallets that showed a clear pattern of buying up unknown NFTs before selling them again after they were added to OpenSea’s front page, often making thousands of dollars in profit with each one.
OpenSea were quick to investigate, with Chastain quitting before he could be fired, although CEO Devin Finzer tried to calm the waters by claiming that the activities should not be classed as insider trading, saying in an interview that “there was a misframing of it as insider trading”, adding that because the company didn’t view NFTs as financial assets, the term should not apply.
FBI Investigation Backed Up Initial Claims
The Department of Justice clearly feels differently however, and an FBI investigation into the affair found that from at least June 2021 to September 2021, Chastain used OpenSea’s confidential business information to “secretly purchase dozens of NFTs shortly before they were featured”.
The DoJ confirmed that Chastain sold the NFTs at “two- to five-times his initial purchase price”, concealing the fraud by using “anonymous digital currency wallets and anonymous accounts on OpenSea.”
Chastain has never publicly commented on the charge, and it is likely now that his first such comment will be whether he pleads guilty or not guilty.
