CEO of Opensea, Devin Finzer had initially come into the media and claimed that some NFT trades made by a former product manager named Nathaniel Chastain had been “misframed” as insider trading. The FBI has declared the trades as insiders trading.
Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”) and Damian Williams, the United States Attorney for the Southern District of New York, announced the unsealing of an Indictment to charge the former product manager at Opeasea. As per the DOJ, Chastain is charged by Attorney Williams with wire fraud and money laundering in connection with a scheme to commit insider trading in Non-Fungible Tokens, or “NFTs.”
The former employee used confidential information from the company database for his benefit. He always knew which NFT was going to feature on the platform’s homepage the following day. By using such critical information the ex-employee made hundreds and thousands of dollars, as per the Indictment. An Indictment is a formal document for a charge of a serious crime filed by the concerned lawyer.
“NFTs might be new, but this type of criminal scheme is not. 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,” U.S. Attorney Damian Williams said.
The Assistant Director-in-Charge of the FBI said that with the emergence of newer blockchain-based investment tools, there are many who try to find vulnerabilities and exploit them for their gain.
The FBI will continue to aggressively pursue actors who choose to manipulate the market in this way.
Chastain bought the NFTs at a cheaper price and sold them for profits of 2x to 5x on his initial investment. He conducted these sales and purchases of NFTs by using anonymous accounts on OpenSea and anonymous digital currency wallets.
The statement laid down by the DOJ finally says that the charges of the Indictment are merely accusations and that the defendant (Nathaniel Chastain) is innocent until proven guilty.