Former product manager of NFT platform OpenSea arrested for insider trading. In particular, according to the US Department of Justice, the ex-employee of the platform decided which NFTs should appear on the main page of the site, and thus increased their availability and market value. Details – further.
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A fraudulent scheme was uncovered on the NFT market: an employee of the popular OpenSea platform was arrested
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What happened
Former OpenSea product manager Nathaniel Chastain was arrested on May 1 morning in New York. Earlier in September 2021, he was publicly accused of insider trading and fired from his position at OpenSea. The current indictment is the first criminal charges related to this scheme.
At OpenSea, Chastain’s job was to decide which collections of NFTs would be featured on the platform’s home page, which usually resulted in the cost of the entire set skyrocketing. The indictment describes a scheme of 45 token purchases on 11 different occasions. In each of them, Chastain bought NFTs shortly before they appeared on the homepage, sometimes just minutes before. According to the prosecutor, Chastain then sold the tokens for a price two to five times higher than he bought.
“NFTs may be considered something new, but this criminal scheme is not,” said Damian Williams, Attorney for the Southern District of New York.
According to the indictment, Chastain is now required to return all money traceable to the proceeds of the scheme.
The investigation was led by the FBI’s National Cryptocurrency Enforcement Team (NCET), without the involvement of the Securities and Exchange Commission, which typically handles insider trading cases. Recently it became known that, referring to the abundance of fraud, the commission doubled the staff involved in the cryptocurrency market.