OpenSea's head of product faces 40 years for NFT insider trading

Nathaniel Chastain (31), a former product manager at OpenSea, the largest online NFT market, was arrested and charged with insider trading. The Department of Justice described his alleged offense as a "Digital Asset Insider Trading Scheme."

During his time at OpenSea, Chastain allegedly used confidential business information to buy NFTs in advance of them being added to the marketplace's front page. He was able to make a profit by selling the items after the NFTs were promoted on OpenSea's front page, according to the DOJ press release.

He's charged with wire fraud and money laundering, each of which is punishable by up to 20 years in prison.

From the DOJ release:

U.S. Attorney Damian Williams said: "NFTs might be new, but this type of criminal scheme is not. As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself. Today's charges demonstrate the commitment of this Office to stamping out insider trading – whether it occurs on the stock market or the blockchain."

FBI Assistant Director-in-Charge Michael J. Driscoll said: "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. 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."