Damian Williams, the United States Attorney for the Southern District of New York, announced that Nathanial Chastain, a former product manager at Ozone Networks, Inc. d/b/a OpenSea (“OpenSea”), was sentenced today to three months in prison in connection with a scheme to commit insider trading in Non-Fungible Tokens, or “NFTs,” by using confidential information about which NFTs were going to be featured on OpenSea’s homepage for his personal financial gain. Chastain was previously convicted at trial of wire fraud and money laundering.
As part of his employment, Chastain was responsible for selecting NFTs to be featured on OpenSea’s homepage. OpenSea kept confidential the identity of featured NFTs until they appeared on its homepage. After an NFT was featured on OpenSea’s homepage, the price buyers were willing to pay for that NFT, and for other NFTs made by the same NFT creator, typically increased substantially. In violation of the duties of trust and confidence he owed to his employer, OpenSea, CHASTAIN exploited his advanced knowledge of what NFTs would be featured on OpenSea’s homepage for his personal financial gain.
From approximately June to September 2021, Chastain used OpenSea’s confidential business information about what NFTs were going to be featured on its homepage to secretly purchase dozens of NFTs shortly before they were featured. After those NFTs were featured on OpenSea, Chastain sold them at profits of two- to five-times his initial purchase price. To conceal the fraud, Chastain conducted these purchases and sales using anonymous digital currency wallets and anonymous accounts on OpenSea.
In addition to the prison term, Chastain, 31, of New York, New York, was sentenced to three months of home confinement, three years of supervised release, a $50,000 fine, and ordered to forfeiture the Ethereum he made trading the featured NFTs.
This post was originally published on this site be sure to check out more of their content.
