Nathaniel Chastain, a former OpenSea product manager, has opted to commence his three-month prison sentence, even as he awaits the outcome of his appeal. On September 6, Chastain’s lawyer informed the New York District Court of his decision to withdraw the bail request, allowing him to freely initiate his prison term by November 2, 2023, following the court’s prior ruling.
Source: CourtListener
In a report by Todayq News on May 4, 2023, Chastain was found guilty of wire fraud and money laundering related to an insider trading scheme involving NFTs. Chastain used confidential information to profit from NFT trades before they were featured on OpenSea’s homepage, resulting in over $50,000 in illicit gains.
Chastain’s attorney also argued that he was unaware that his trades involved confidential information and that OpenSea never explicitly prohibited him from using or disclosing such information. OpenSea conducted an internal investigation and subsequently asked him to leave the company.
In accordance with the court’s previous order and judgment, Chastain is obligated to self-surrender by November 2, marking the beginning of his sentence for insider trading on the OpenSea NFT platform. In addition to the prison term, he was also fined $50,000 and required to forfeit any cryptocurrency obtained through illicit trading on OpenSea.
The essence of the case revolved around Chastain’s influential role in determining which NFTs and collections would be prominently featured on OpenSea’s homepage. This authority significantly increased their visibility and, potentially, their market value.
Related Article: FBI charges former OpenSea employee for insider trading
The prosecution alleged that Chastain acquired 45 NFTs before they were prominently featured on the platform’s homepage, subsequently reselling them at a profit once their prices had surged. Prosecuting attorney Allison Nichols argued that Chastain was fully aware that his actions were illegal, as evidenced by his use of anonymous OpenSea accounts to conduct these trades.
Chastain’s decision to commence serving his sentence while his appeal is ongoing underscores the significance of this case within the NFT marketplace and highlights the consequences faced by individuals found guilty of insider trading. As the legal proceedings continue, the outcome of Chastain’s appeal and its potential implications for the broader NFT industry remain subjects of interest and scrutiny.