Tuesday, February 7, 2023

DOJ Charged Ex OpenSea Executive With Insider Trading

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The DOJ charged Ex Opensea executive Nate Chastain with insider trading, claiming that he betrayed the platform by using confidential business information, according to US Attorney Damian William so let’s read more today in our latest cryptocurrency news.

OpenSea CEO Devin Finzer said that there were some suspicious NFT trades made by the former executive that was “misframed” as insider trading but today, the Department of Justice, the DOJ charged ex OpenSea Nate Chastain with insider trading. The FBI and the DOJ arrested and charged Nate Chastain who is a former OpenSea product managed with money laundering and wire fraud for alleged trades that he made using insider knowledge of which the NFT collections were going to be featured on the homepage of the marketplace. Each charge carries a sentence of 20 years in prison. The FBI assistant director in charge said:

“With the emergence of any new investment tool, such as blockchain supported non-fungible tokens, there are those who will exploit vulnerabilities for their own gain. The FBI will continue to aggressively pursue actors who choose to manipulate the market in any way.”

The DOJ worked with the New York field office of the Federal Bureau of Investigation that alleged between June and September, Chastain purchased dozens of NFTs before they were scheduled to be featured on the OpenSea homepage as the largest NFT marketplace. As a part of his role as a product manager, the investigators said he was responsible for selecting which collections will be featured. One of the NFTs was featured and surged in value as he sold them for up to five times his initial purchase price and used the anonymous accounts and wallets to conceal transactions as per investigators.

A week after Chastain resigned from OpenSea after the discovery of the wallets he used to flip NFTs and the company’s CEO objected to calling Chastain’s action insider trading. Finzer said:

“I do think there was a misframing of it as insider trading. We don’t view NFTs as financial assets, so that does not apply. That’s a very specific thing.”

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The court proceedings will put a damper on Chastain’s new project OVAL which describes itself as a social commerce platform designed by the talent from Instagram and OpenSea. The NFT discovery platform was looking to raise $3 million in seed funding at a $30 million pre-money valuation that was revised down from the earlier goal of the $7.5 million and $50 million pre-money valuation.  Before the arrest and unsealing of the indictment, the controversy over Chastain’s departure had lasting effects. After the reign of concerns that traders were taking advantage of the company’s listing process, the Coinbase CEO also published a blog with new policies, one of the main changes was the decision to stop publicizing a shortlist of the assets that were considered for listing on the exchange.

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