The trial of former OpenSea product manager Nathaniel Chastain is set to begin later this week, nearly a year since his arrest in New York City About wire fraud. Chastain’s arrest came at the end of an FBI investigation in his Non-fungible tokens (NFT), which alleged that he secretly bought NFTs and resold them at two to five times their original value.
Prosecutors allege that Chastain used the commercial information in open c To mark the higher value tokens that will be displayed on the company homepage and use the information to generate profits. This trial is the first insider trading criminal case involving NFTs, according to the Reutersbut US Attorney General Damien Williams said on June 1 filingNFTs may be new, but this type of criminal scheme is not.
OpenSea is the largest online marketplace for buying and selling NFTs, and Chastain’s lawyers argued in a pre-trial conference Thursday that Chastain’s actions do not fall under insider trading because the information obtained provided no value to OpenSea. Chastain’s attorney, David Miller, said: “We’re not talking about trading securities, there is a significant risk of undue bias and confusion for the jury.”
Contrary to Miller’s claims that Chastain committed no crime, the The indictment was filed In May last year, OpenSea said its employees had required its employees to keep any and all business information confidential and had “an obligation to refrain from using such information, except for the benefit of OpenSea or to the extent necessary to perform work for OpenSea.” The indictment says Chastain had signed a written agreement with OpenSea when he began working for the company and acknowledged those obligations in the agreement.
Chastain allegedly sold NFTs from June 2021 through at least September 2021 and according to the indictment, in one case, Chastain purchased four of “The Brawl 2” NFTs just minutes before they appeared on the OpenSea homepage, selling them for double the amount he bought them within hours.
He reportedly used several anonymous accounts and Digital wallets To fly under the radar while buying and selling NFTs. FBI Assistant Director in Charge Michael J. Driscoll said in the June filing, “In this case, it is alleged, Chastain launched a long-standing scheme to commit insider trading by using his knowledge of classified information to pre-purchase dozens of NFTs from which to display on the OpenSea homepage.” . “The FBI will continue aggressively prosecuting actors who choose to manipulate the market in this way,” he added.
Chastain is charged with wire fraud and one count of money laundering. His trial is expected to last one to two weeks, and if convicted, he faces a maximum prison sentence of 20 years.
OpenSea did not immediately respond to Gizmodo’s request for comment.