On May 3, the New York Federal Court issued a report on the conviction of OpenSea ex-manager Nathaniel Chastain. The prosecutors charged Chastain with wire fraud and breaching the US Anti-Money Laundering Regulations.
According to the prosecutors’ Chastain leveraged his insider knowledge to engage in crypto crime. They mentioned that Chastain had overall control of listing non-fungible tokens (NFTs) on the OpenSea marketplace.
Chastain Charged with Insider Trading
After a thorough investigation, the prosecutors observed that Chastain purchased NFTs featured on the OpenSea trading platform. Later, Chastain sold the NFT to generate a profit of $50000 which was connected to insider trades.
Following this, the US Department of Justice (DoJ) labelled the Chastain case as the first insider trade involving NFTs. The DoJ accused Chastain of disclosing OpenSea’s confidential information for personal gain.
Besides engaging in unlawful NFT trading, Chastain was accused of wire transfer and facilitating money laundering activities. In June 2022, the DoJ joined efforts with the FBI and arrested Chastain.
As of the time of Chastain’s arrest, the OpenSea trading platform ranked among the largest marketplace for digital collectables. The OpenSea platform provided users with multiple options for traders to trade and mint their crypto assets.
According to DappRadar OpenSea trading volume reached $4.5 million in the last 24 hours.
Chastain Faces Probe
After a lengthy investigation, the legal experts took potential action against Chastain, subjecting him to court trials on April 24. The lawyers’ submission has created mixed thoughts concerning the grouping of NFT. Some lawyers questioned whether the NFT was considered a security or commodity.
The DoJ charges obliged the court to task legal practitioners in cryptocurrency to probe the Chastain case last June. In the final court trial, the attorney Daniel Filor presented a defensive report to the court stating that Chastain was not guided accordingly on the disclosure of confidential information.
Filor argued that OpenSea failed to clarify the procedure for data sharing. Responding to Filor, attorney Allison Nichols illustrated that Chastain had “anonymous” OpenSea user accounts that he used to engage in suspicious crypto trading activity.
She stated Chastain created multiple user accounts to avoid further potential enforcement action. Nichols added that Chastain knew that he was breaching OpenSea core values.
Court Ruling on Chastain Insider Trader Case
Based on the prosecutors finding, Chastain will be sentenced for a 20 years imprisonment for every DoJ charge. The court scheduled the final ruling concerning Chastain’s sentencing for August 20.
The decision made by Judge Jesse Furman obliged the Chastain lawyer David Miller to disagree with the court ruling. He announced that despite honouring the court process, Miller was disatisfied with the jury’s final decision.
The Chastain case mirrors a crypto insider trading executed by Coinbase’s former employee Ishan Wahi. In February, Wahi and his younger brother Nikhil pleaded guilty for engaging in insider trading. Wahi was also accused of conspiring a wire fraud.