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U.S. charges OpenSea ex-employee in first NFT insider trading case

by Enochadmin

NEW YORK, June 1 (Reuters) – U.S. prosecutors in Manhattan on Wednesday charged a former product supervisor at OpenSea, the most important on-line market for non-fungible tokens, with insider buying and selling, the primary such case involving digital belongings.

Nathaniel Chastain, 31, of Manhattan, was accused of secretly shopping for 45 NFTs on 11 separate events based mostly on confidential info that the tokens, or others by the identical creator, would quickly be featured on OpenSea’s residence web page.

Prosecutors stated Chastain selected which NFTs to function, and offered his NFTs shortly after they have been featured, sometimes for 2 to 5 instances what he paid.

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In a single occasion, Chastain allegedly greater than quadrupled his cash by buying the NFT “Spectrum of a Ramenfication Idea” on Sept. 14, 2021, and promoting it early the following morning.

Prosecutors stated the scheme ran from June to September 2021, with Chastain transacting by means of nameless digital forex wallets and accounts at OpenSea, also called Ozone Networks Inc.

Chastain pleaded not responsible on Wednesday to wire fraud and cash laundering fees, every carrying a most 20-year jail time period, earlier than U.S. Justice of the Peace Choose Barbara Moses in Manhattan.

Bond was set at $100,000. Chastain’s lawyer didn’t instantly reply to requests for remark.

“NFTs may be new, however this sort of prison scheme isn’t,” U.S. Lawyer Damian Williams in Manhattan stated in an announcement. “Immediately’s fees exhibit the dedication of this workplace to stamping out insider buying and selling – whether or not it happens on the inventory market or the blockchain.”

Non-fungible tokens are distinctive digital belongings, reflecting possession of recordsdata equivalent to art work, different photographs, movies and textual content, and recorded on a blockchain.

The NFT market totaled about $40 billion in 2021, and greater than $37 billion from January to April 2022 although transaction exercise has been stabilizing, in line with the blockchain information agency Chainalysis Inc.

“After we realized of Nate’s habits, we initiated an investigation and in the end requested him to go away the corporate,” OpenSea stated in an announcement about Chastain. “His habits was in violation of our worker insurance policies and in direct battle with our core values and ideas.”

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Reporting by Jonathan Stempel in New York; Further reporting by Luc Cohen in New York; Modifying by Richard Chang, Bernard Orr

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