Nate Chastain, the OpenSea staffer who quit the NFT marketplace after an insider trading scandal in September 2021, is now in the crosshairs of U.S. authorities.
Chastain was charged Wednesday with wire fraud and money laundering in connection with trading on confidential information about which non-fungible tokens were about to be featured on the OpenSea homepage, the Department of Justice said in a press release. The two charges each carry a maximum sentence of 20 years in prison.
The Justice Department alleged in the release that Chastain flipped "dozens of NFTs" after choosing to feature them on the website, selling them for two to five times what he initially paid. Chastain hid his fraud by making these purchases using anonymous digital currency wallets and anonymous OpenSea user accounts, according to the Justice Department.
"NFTs might be new, but this type of criminal scheme is not," U.S. Attorney Damian Williams said in a statement. "As alleged, 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."
For its part, OpenSea said it quickly moved to investigate Chastain once it found out about his actions, and then asked him to resign.
"When we learned of Nate’s behavior, we initiated an investigation and ultimately asked him to leave the company," an OpenSea spokesperson told CoinDesk. "His behavior was in violation of our employee policies and in direct conflict with our core values and principles."
Chastain, 31, is working on a new NFT project, Oval, as CoinDesk reported in March based on investor materials. The Justice Department said Chastain was arrested this morning in New York.
