This week, Nathaniel Chastain will face trial for insider trading with non-fungible tokens (NFTs). In June 2022, the former OpenSea product manager was arrested and is charged with wire fraud and money laundering each, and if found guilty, could get sentenced to up to 20 years in prison. Following allegations from the community that Chastain utilized confidential information from OpenSea to make personal gains, the jury will preside over the first-ever NFT insider trading trial.

At OpenSea, Chastain was responsible for selecting which NFTs would appear on the home page and it was noticed that, usually, the collection’s price would substantially increase after the listing. It is alleged that Chastain would buy the NFTs before the listings and then sell them through secret wallets.

To defend himself, Chastain has approximately 300 attorneys who state that confidential business information is property would effectuate a breathtaking expansion of federal fraud and criminalize a broad swath of conduct never before thought criminal. His attorneys also claim that the preliminary information before the listing was not OpenSea’s property and did not hold inherent value to the company and that employees weren’t prohibited from trading featured NFT collections before Chastain’s last day.

The U.S. government prosecutors estimate that Chastain made $57,000 in profits by trading NFTs based on insider information, however, he has been charged with wire fraud as opposed to SECs regulations which prevent investment advisers, brokers and others from trading on material nonpublic information.

Former Coinbase product manager Ishan Wahi, is another example of insider trading with respect to cryptocurrencies. Wahi pleaded guilty to wire fraud and money laundering counts back in February. He was accused of insider trading for purchasing several cryptocurrencies before Coinbase listings. This case has potential implications for assets outside existing regulations and theoretically could be applied to any asset class.

Overall, Nathaniel Chastain's trial for NFT insider trading could bring significant changes to the cryptocurrency and asset trading scenario, possibly broadening legal coverage for all asset classes.



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