Ex-OpenSea employee arrested, charged with NFT insider trading

A former senior executive at the internet’s largest NFT trading platform has been arrested and named in the government’s first case alleging insider trading in digital assets, the Justice Department announced on Wednesday.

Nate Chastain, the former New York-based product manager of OpenSea, is accused of buying NFTs shortly before the company planned to feature them on its homepage, taking advantage of their exposure and of his company’s apparent endorsement, according to the Justice Department.

NFTs, short for non-fungible tokens, are digital assets rooted in the same core technology as cryptocurrencies and provide a way to prove digital ownership. The popularity of NFT artwork has exploded during the pandemic, creating an estimated $40 billion market last year.

The charging documents allege that Chastain laundered at least 45 NFTs in 2021, each time selling them for two to five times what he had just paid for them.

An OpenSea spokesperson said the company investigated Chastain about the incidents “and ultimately asked him to leave the company.”

“His behavior was in violation of our employee policies and in direct conflict with our core values ​​and principles,” the spokesperson said.

An attorney representing Chastain, David Miller, said in an emailed statement that “Mr. Chastain is not guilty of the charges. When all the facts are known, we are confident that he will be exonerated.

After a surge in popularity, interest in NFT art has begun to cool in recent months, and hackers and scammers have turned their attention to NFT trading.

Some NFTs have artificially increased in value because their owners have repeatedly sold themselves their own works, a scam known as wash trading. Others have successfully sold NFTs of other artists’ works without permission. Actor Seth Green recently claimed that the theft of one of his NFTs by a hacker prevented him from finishing a new show.

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