Federal grand jury indicts former OpenSea employee Nate Chastain for alleged insider trading of confidential business information of NFTs to be featured by OpenSea [download indictment]

nftjedi

4 years ago

In a stunning announcement, the US Attorney for the Southern District of NY Damian Williams announced that a federal grand jury has indicted former OpenSea employee Nate Chastain for two counts of felonies: (1) wire fraud and (2) money laundering.
The first count of wire fraud is predicated on Chastain’s alleged insider trading of NFTs to be featured on OpenSea’s website. Chastain traded the NFTs for profits based on using OpenSea’s “confidential business information.”
The indictment alleges that Chastain engaged in such trading of at least 45 NFTs and sold them for 2 to 5 times the purchase price.
The indictment does NOT include a claim of insider trading related to a securities in violation of SEC Rule 10b-5. Many commentators thought, unless and until NFTs are classified as securities, insider trading of NFTs was OK. Apparently, it’s not. At least the U.S. government believes it’s not. (Will do some more research to get a better handle on how novel (or routine) the government’s theory is.)
For more about the incident involving Chastain when it occurred, check out our prior post.