Former OpenSea manager sentenced in NFT insider trading case

a year ago

Prosecutors had sought a far longer sentence following a guilty verdict in the first case tie to NFT insider trading

A judge sentenced Nathanial Chastain, the former OpenSea manager who front-ran his employer’s NFT listings, to three months in prison on Tuesday.

Chastain, a former OpenSea manager, was convicted in a New York court in May, found guilty on charges of wire fraud and money laundering. The jury’s verdict cemented the first known insider trading-like case in the NFT sector.

Prosecutors had sought roughly 21 to 27 months for Chastain’s sentencing. The value of the ether (ETH) proceeds Chastain earned have fluctuated wildly in tune with the market, making pinning down his precise ill-gotten gains more difficult.

Chastain made roughly $50,000 “using his knowledge of confidential information to purchase dozens of NFTs in advance of them being featured on OpenSea’s homepage,” the FBI said in 2022.

Chastain was charged with a count of wire fraud and a count of money laundering that same year.

“NFTs might be new, but this type of criminal scheme is not,” US Attorney Damian Williams said at the time.

Chastain resigned from OpenSea back in 2021, with OpenSea going on to say that it would impose new practices to prevent similar future misconduct. Chastain’s lawyer had previously argued that he did not violate any company rules with his trades.

Chastain’s defense claimed the case was “unfair” prior to the start of the trial, but the judge overseeing the case denied his motions, allowing the case to proceed.

“Put simply, the trial in this case is about whether Chastain committed the charged crimes; it is not about whether the prosecution is fair or unfair,” Judge Jesse Furman then said.

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