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DOJ Arrests Former Opensea Employee Running A Fraudulent Scheme

Nathaniel Chastain, the former product manager at Opensea (Ozone Networks Inc.), was recently arrested. The U.S. Department of Justice (DOJ) has formally called the crimes of Chastain the “first-ever digital asset insider trading scheme.”

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The Department of Justice explained the reasons for the arrest that happened on Monday in New York. The department announced that during four months, i.e., between June to September 2021, Chastain allegedly secretly purchased many NFTs before they were featured. The defendant accessed Opensea’s confidential information and illegally used it to gather information about the NFTs that would be featured on the site. 

The department further stated that right after the NFTs were featured, Chastain sold them at profits 2 to 5 times higher than the initial price at which the defendant bought them. 

The defendant was responsible for selecting those NFTs that would be featured on Opensea’s homepage. The firm planned to keep the identity of the NFTs until they were featured. However, the Department of Justice further adds that after the NFTs were featured, the price of the featured NFTs increased substantially. Similarly, the price of other NFTs by the same creator also increased. 

Court documents are evidence that Chastain purchased 45 NFTs on 11 different occasions through the fraudulent scheme. 

Damian Williams, the U.S. Attorney, gave remarks about the fraudulent scheme and the role the Department of Justice played in it. He opined that the charges against Chastain clearly show the Office’s responsibility, ability, and commitment to stop insider trading in both the stock market and blockchain. 

Chastain used anonymous digital currency wallets and anonymous accounts at Opensea to purchase and sell the NFTs. The anonymity was to conceal his fraud from the general public and the stakeholders of Opensea, as stated by the Department of Justice.

The Department gave the concluding statement, 

“Chastain, 31, of New York, New York, is charged with one count of wire fraud and one count of money laundering, each of which carries a maximum sentence of 20 years in prison.”