Justice Department officials have detailed a complaint against a former Ozone Networks, Inc. d/b/a OpenSea product manager in connection with a Non-Fungible Tokens (NFTs) insider trading scheme.
Authorities indicated an indictment had been unsealed, charging Nathaniel Chastain, 31, with wire fraud and money laundering.
“NFTs might be new, but this type of criminal scheme is not,” United States Attorney for the Southern District of New York Damian Williams said. “As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself.”
Williams said the charges demonstrate commitment to stamping out insider trading, whether on the stock market or the blockchain.
The complaint alleges that from around June 2021 to at least in or about September 2021, Chastain used OpenSea’s confidential business information about what NFTs would be featured on its homepage to secretly purchase dozens of NFTs shortly before they were featured.
According to the complaint, after the NFTs were featured on OpenSea, Chastain sold them at profits of two to five times his initial purchase price and allegedly conducted the purchases and sales using anonymous digital currency wallets and anonymous accounts OpenSea to conceal the fraud.
“In this case, as alleged, Chastain launched an age-old scheme to commit insider trading by using his knowledge of confidential information to purchase dozens of NFTs in advance of them being featured on OpenSea’s homepage,” FBI Assistant Director-in-Charge Michael J. Driscoll said. “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.”