It was only a matter of time before the first case of fraud and money laundering involving NFTs, the non fungible tokens to which we dedicated an in-depth study some time ago. The protagonist is the 31-year-old Nathaniel Chastain, product manager of what is perhaps the best known NFT marketplace in the world, OpenSeawho resigned when it was discovered that he was using confidential information to enrich himself.
Now the charges of computer fraud and money laundering have been formalized by the New York Southern District Justice Department leading to its arrestand it is the first time which is prosecuted against a case of insider trading involving a digital asset what are the NFTs. Chastain’s gimmick is old and widely punished by law, but probably what encouraged the former OpenSea product manager to put a plan into action that was certainly not the most intricate is the lack of regulation on NFTs.
OLD MAKEUP, RISKS UP TO 20 YEARS IN PRISON
Chastain was in charge of selecting the NFTs to be presented on OpenSea – which, for the record, has recently been renovated. So he bought some “dozen” in advance to resell them then when their value jumped to two, three, too five times the purchase price. When the marketplace became aware of the thirty-one-year-old’s modus operandi, the complaint was immediately triggered, which triggered the sequence of events that led to the name of Chastain in the paperwork of the New York Department of Justice. Now faces up to 20 years in prison.
FBI Deputy Director Michael J. Driscoll, who played an active role in shaping the story, said:
In this case, as we have ascertained, Chastain used a known scheme for insider trading by leveraging knowledge of confidential information to purchase dozens of NFTs before they were featured on the OpenSea homepage. With the emergence of any new investment tool, such as NFTs, there are always those who exploit the shaded areas to their advantage.
US Attorney Damian Williams echoes:
NFTs may be new, but this kind of criminal scheme is not. Nathaniel Chastain betrayed OpenSea by using confidential business information to get rich.