{"id":6734,"date":"2023-05-03T21:20:32","date_gmt":"2023-05-03T21:20:32","guid":{"rendered":"https:\/\/nft.runfyers.com\/index.php\/2023\/05\/03\/former-opensea-employee-convicted-in-first-nft-insider-trading-case\/"},"modified":"2023-05-03T21:20:32","modified_gmt":"2023-05-03T21:20:32","slug":"former-opensea-employee-convicted-in-first-nft-insider-trading-case","status":"publish","type":"post","link":"https:\/\/nft.runfyers.com\/index.php\/2023\/05\/03\/former-opensea-employee-convicted-in-first-nft-insider-trading-case\/","title":{"rendered":"Former OpenSea employee convicted in first NFT insider trading case"},"content":{"rendered":"

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A 32-year-old former product manager at OpenSea has been found guilty of fraudulently purchasing non-fungible tokens he knew would sharply increase in value, in the first conviction for what prosecutors described as insider trading of digital assets.<\/p>\n

Nate Chastain, who worked at OpenSea \u2014 then the largest platform for buying and selling NFTs<\/a> \u2014 was charged last year in New York with wire fraud and money laundering.<\/p>\n

US prosecutors claimed he had bought 45 tokens over the course of approximately five months that he knew would surge in popularity once they were displayed on the site\u2019s homepage, only to sell them soon after for between two and five times the price he paid.<\/p>\n

The transactions were first flagged by a Twitter user in late 2021, and Chastain\u2019s scheme was subsequently confirmed<\/a> by OpenSea, which pledged to tighten its controls.<\/p>\n

\u201cHe cheated, he stole, and he lied,\u201d assistant US attorney Allison Nichols told jurors in closing arguments on Monday. \u201cHe saw a way to make some extra money, to capture some upside\u201d.<\/p>\n

She referred to messages from Chastain presented at trial in which he referred to having \u201cFOMO\u201d or \u201cfear of missing out\u201d when not buying NFTs that were set to balloon in value.<\/p>\n

Chastain\u2019s lawyers argued that there were \u201cno policies, no training, no guidance\u201d at OpenSea prohibiting the defendant from buying the NFTs in question, and that such rules were only put in place once Chastain\u2019s transactions became a public matter.<\/p>\n

They pointed out that when confronted by a Twitter user about his transactions in August 2021, Chastain publicly responded that he had bought a particular NFT because he \u201cwanted to secure one of these before they all disappeared [to be honest]\u201d.<\/p>\n

\u201cHe told the world, and the world didn\u2019t care \u2014 he got likes,\u201d defence counsel Daniel Filor, of law firm Greenberg Traurig, said in closing arguments.<\/p>\n

Prior to the week-long trial, Chastain\u2019s lawyers had argued that an \u201cinsider trading\u201d case required the involvement of securities or commodities, labels that they claimed did not apply to NFTs. Chastain\u2019s actions, they said, were akin to an employee of an art gallery promoting their own painting and fetching a higher sum for it as a result.<\/p>\n

At its peak, OpenSea facilitated more than $3.8bn in NFT transactions per month on its platform, according to data from DappRadar, with some digital artworks selling for millions of dollars. Volumes have since dropped considerably, to $200mn over the past 30 days.<\/p>\n