The Department of Justice has charged Nate Chastain, a former OpenSea executive, with insider trading in a case that could set a precedent for NFTs and other areas of crypto more broadly that have not previously been subject to insider trading enforcement.
Chastain is alleged to have traded on NFTs using confidential business information about which NFTs were to be on OpenSea's home page. Chastain, who was arrested in New York this morning, is charged with wire fraud and money laundering.
As part of Chastain's job, he was responsible for selecting NFTs that were featured on OpenSea's home page. When those NFTs were featured on the site, their prices would rise, the DOJ alleged. The DOJ said it was the first-ever insider trading charge involving digital assets.
From June to September 2021, Chastain used the information to buy dozens of NFTs before they were on OpenSea. He then sold them for two to five times his purchase price.
OpenSea is the largest NFT marketplace and was valued at $13.3 billion in January. OpenSea was also the subject of controversy when it froze the sale of 16 NFTs on its platform that were allegedly stolen.