A former top executive at prominent NFT startup OpenSea was arrested on Wednesday and charged with wire fraud and money laundering in connection with a scheme to commit insider trading, according to a press release from the United States Justice Department.
Nathaniel Chastain, OpenSea’s previous Head of Product, was responsible for selecting NFTs to be featured on the company’s homepage. OpenSea kept the identity of featured NFTs confidential until they appeared on its homepage.
From about June to September of 2021, Chastain used OpenSea’s confidential business information about which NFTs would be featured to buy dozens of the digital commodities shortly before those NFTs, or NFTs by the same creator, were featured on OpenSea’s homepage.
To conceal his purchases, Chastain used anonymous OpenSea accounts, instead of his publicly-known account in his own name. He also transferred funds through multiple anonymous Ethereum accounts in order to conceal his involvement.
Chastain faces a maximum penalty of 20 years in prison for each count, the Justice Department said. Justice Department officials said this was the first time they had pursued insider trading charges involving digital assets.