A former product manager at the OpenSea NFT marketplace was found guilty of fraud and money laundering in connection with insider trading on May 3.
Nathaniel Chastain allegedly used insider information about the assets that would appear on OpenSea’s home page to make purchase decisions.
What is Known About the Case
According to the report, the accused purchased non-fungible tokens (NFTs) and then sold them soon. Which reportedly earned him more than $50,000 in illicit profit. The federal prosecutors in Manhattan described the case as the first insider trading case involving digital assets.
Prosecutor Thomas Burnett was quoted saying,
“He abused his status at OpenSea to line his own pockets, and he lied to cover his tracks.”
According to prosecutor Allison Nichols, Chastain used anonymous OpenSea accounts to conduct the illicit trades. He argued that his actions demonstrated that Chastain was aware of the wrongness of what he was doing.
According to a spokeswoman for OpenSea, the business launched an investigation after becoming aware of Chastain’s alleged behavior and “ultimately asked him to leave.”
NFTs Are ‘Not the Stock Market’
According to an earlier defense argument, the former product manager was not informed that his trade decisions were confidential. While Chastain’s attorney, Daniel Filor, did not contest the trades, he claimed no one at the company had ever prohibited him from using or disclosing information regarding which NFTs would be featured on the homepage.
On the verdict, Filor said, “We disagree, however, with the jury’s verdict and we are evaluating our options.”
The original charges were brought on last year, and Chastain has denied them ever since.
According to the prosecution, Chastain bought roughly 45 NFTs. And he sold them for anywhere from two to five times the original cost.
The case raises the issue of whether existing may be used to better regulate the cryptocurrency and NFT markets. Particularly now that the U.S. has lagged in supervision and the securities regulator has come under fire for its enforcement action.
“It’s not the stock market,” according to Filor.
The five-day trial on the case began last week and concluded on Wednesday with a guilty verdict.
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