Former NFT marketplace director convicted of insider trading

In October last year you could read in the NFT news that hard evidence had been found for insider trading at the NFT trading platform OpenSea. This related to Nathanial Chastain, a former product leader at OpenSea, who was charged with insider trading earlier in June. He would have used one bug on OpenSea that allowed him to make easy profits trading non-fungible tokens (NFTs).

According to a report from Reuters Chastain was convicted of money laundering and banking fraud by a New York federal court on Wednesday

NT fraud

Chastain would have known about the bug in the period from June 2021 to September 2021 and used it. This was also a period when the market for NFTs was still very popular, right before the onset of the bear market that dealt a heavy blow to the NFT market. Chastain made more than $50,000 by buying NFTs he knew would appear cheap on the company’s website, then selling them at high prices after increased attention drove prices up.

Chastian tried to hide his purchases by using anonymous wallets and OpenSea accounts.

In 2021, the former product leader was also forced to resign after allegations of insider trading circulated on social media.

U.S. Attorney Damian Williams said the following in a statement:

Nathanial Chastain leveraged his advanced knowledge of which NFTs would appear on the OpenSea website to make profitable trades for himself. While this case involved new transactions in crypto assets, there was nothing particularly innovative about his behavior.”

After failing to have the case dismissed on procedural grounds, Chastain went to trial in Manhattan on April 24. After three days of deliberation, the jury found Chastain guilty of bank fraud and money laundering. Chastain faces a prison sentence of up to 40 years.

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Former Coinbase employee confesses to insider trading

In February of this year, you could also read that Ishan Wahi, a former Coinbase product manager, pleaded guilty to insider trading before a US judge. Wahi was the first official lawsuit for crypto insider trading in the United States.

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