- A jury in New York found Nate Chastain, the former Head of Product of Opensea, guilty of wire fraud and money laundering for his conduct back in September 2021, which now seems ages ago.
- The case is often described as “insider trading” of NFTs, even though technically the case did not include insider trading of securities. In a prior post, we explained the Supreme Court precedent, Carpenter v. United States, which supports the application of the federal wire fraud statute to a situation in which an employee uses confidential business information of his employee, without authorization “devis[ing] any scheme or artifice … for obtaining money or property by means of false or fraudulent pretenses.”
- That’s what federal prosecutors alleged here. Chastain used the confidential information of which NFTs would be featured on the OpenSea homepage, and then used that information to trade those NFTs for a profit of approximately $57,000 (in ETH).
Possible Sentence for Nate Chastain
- The maximum sentence for each count is 20 years. But there’s 0% chance of 60 years.
- This case will probably be on the low range under the sentencing guidelines.
- $57,000 (in ETH) profit.
- 1st time offender.
- In 2018, the average federal sentence for wire fraud (a 2B1.1 offense) was 23 months. For money laundering (a 2S1.1 offense), 70 months.
- A guesstimate: I took a quick look at the federal sentencing guidelines to guess what the recommended range might be. Unless there are aggravating factors, and assuming $57,000 is used as the loss amount (though unclear it is), we could see a recommendation of 12-18 months for wire fraud (13 offense level), and the same amount for money laundering. (*This is my best guess at the moment.)
- The judge has ultimate discretion even with the guidelines. Most judges go downward. And the judge decides whether the sentence run concurrently (at the same time) or consecutively.