By Jonathan Stempel
NEW YORK (Reuters) – U.S. prosecutors in Manhattan on Wednesday charged a former product manager at OpenSea, the largest online marketplace for non-fungible tokens, with insider trading, the first such case involving digital assets.
Nathaniel Chastain, 31, of Manhattan, was accused of secretly buying 45 NFTs on 11 separate occasions based on confidential information that the tokens, or others by the same creator, would soon be featured on OpenSea’s home page.
Prosecutors said Chastain chose which NFTs to feature, and sold his NFTs shortly after they were featured, typically for two to five times what he paid.
Bond was set at $100,000. Chastain’s lawyer did not immediately respond to requests for comment.
“NFTs might be new, but this type of criminal scheme is not,” U.S. Attorney Damian Williams in Manhattan said in a statement. “Today’s charges demonstrate the commitment of this office to stamping out insider trading – whether it occurs on the stock market or the blockchain.”
The NFT market totaled about $40 billion in 2021, and more than $37 billion from January to April 2022 though transaction activity has been stabilizing, according to the blockchain data firm Chainalysis Inc.
“When we learned of Nate’s behavior, we initiated an investigation and ultimately asked him to leave the company,” OpenSea said in a statement about Chastain. “His behavior was in violation of our employee policies and in direct conflict with our core values and principles.”
(Reporting by Jonathan Stempel in New York; Additional reporting by Luc Cohen in New York; Editing by Richard Chang, Bernard Orr)