Former OpenSea Employee Arrested and Charged with Insider Trading Scheme 

Nathaniel Chastain, former product manager at OpenSea, was arrested Wednesday and charged “with wire fraud and money laundering in connection with a scheme to commit insider trading in NFTs,” according to a press release from the U.S. Attorney’s Office in the Southern District of New York (SDNY). 

U.S. Attorney Damian Williams said in the press release:  “NFTs might be new, but this type of criminal scheme is not.  As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself.  Today’s charges demonstrate the commitment of this Office to stamping out insider trading – whether it occurs on the stock market or the blockchain.”

This was the first time the FBI has charged an employee of an NFT-related insider trading scheme.  Based on allegations, Nathaniel Chastain could face up to 20 years in prison for each of his accusations.  

In 2021, Nathaniel Chastain used OpenSea’s confidential business information about upcoming NFTs in order to secretly purchase dozens of NFTs shortly before they were featured.  After these NFTs were featured on OpenSea, he sold those NFTs two to five times higher than their initial price.  When OpenSea acknowledged this incident, they fired him after Chastain’s allegations were legitimate.  

FBI Assistant Director-in-Charge Michael J. Driscoll said in the press release: “ With the emergence of any new investment tool, such as blockchain supported non-fungible tokens, there are those who will exploit vulnerabilities for their own gain. The FBI will continue to aggressively pursue actors who choose to manipulate the market in this way.”