Nate Chastain, a former product manager at OpenSea, was sentenced to three months in prison for insider trading in Non-Fungible Tokens (NFTs). This marks the first-ever digital asset insider trading conviction, according to the United States Attorney for the Southern District of New York, Damian Williams.
Chastain, 33, was found guilty of exploiting confidential information about which NFTs were going to be featured on OpenSea’s homepage for his personal financial gain. From June to September 2021, he used this information to secretly purchase dozens of NFTs shortly before they were featured, selling them at profits of two to five times his initial purchase price. The profits reaped from this scheme amounted to more than $50,000.
To conceal the fraud, Chastain conducted these purchases and sales using anonymous digital currency wallets and anonymous accounts on OpenSea. He was convicted of wire fraud and money laundering in federal court in New York in May.
U.S. Attorney Damian Williams said in a statement: “Today’s sentence should serve as a warning to other corporate insiders that insider trading – in any marketplace – will not be tolerated.”
In addition to the prison term, Chastain was sentenced to three months of home confinement, three years of supervised release, and a $50,000 fine. He has also been ordered to forfeit the ETH he made trading the featured NFTs.
The case against Chastain was handled by the Office’s Securities and Commodities Fraud Task Force, with the Federal Bureau of Investigation praised for their outstanding investigative work. Assistant U.S. Attorneys Thomas S. Burnett, Allison Nichols, and Nicolas Roos were in charge of the prosecution.