Ex-OpenSea employee on trial for insider trading
Following a case of insider tradingNathaniel Chastain, former product manager of OpenSea was charged by the American justice system with wire fraud and money laundering. If he is presumed innocent until the verdict of the trial, the person concerned nevertheless risks a maximum of 20 years in prison for each of the facts cited.
Indeed, from June 2021 minimum, until September, Nathaniel Chastain used his professional position to generate personal profit.
The nature of this insider trading is that he had knowledge, in advance, of the non-fungible tokens (NTFs) that would be featured on the OpenSea homepage. This confidential information enabled him to purchase copies of said NFTs as soon as possibleto then generate a capital gain of two to five times its initial investment at the time of resale.
Michael J. Driscoll, Deputy Director of Federal Bureau of Investigation (FBI) in New York, insisted that such actions would not go unpunished :
“With the emergence of any new investment tool, such as non-fungible tokens […], some will exploit the vulnerabilities for their own benefit. The FBI will continue to aggressively pursue players who choose to manipulate the market in this way. »
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A behavior betrayed by the blockchain
It was last September that the behavior of Nathaniel Chastain was noted by the community. Indeed, if the accused used different addresses to commit these acts, it is the communication of these with its main address, containing a CryptoPunk, which will have betrayed him.
This affair had pushed OpenSea to enjoin its employee to resign, which he did.
Damian Williams, United States Attorney for the Southern District of New York, clarified that while NFTs are new, insider trading is not. These are by the way far from being the prerogative of our ecosystem.
However, this is not the first time that the community reveals such practices using public blockchain data. Last April, a crypto influencer had actually noted the suspicious activity of an address, which would have benefited in advance from information on possible Coinbase listing additions.
These events remind us that while cryptocurrencies are regularly hyped about money laundering, reality shows that the public environment makes this practice unwise.
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Source: United States Department of Justice
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