On May 3, 2023, a jury found Nathaniel Chastain, a former manager of OpenSea (a major NFT marketplace), guilty of wire fraud and money laundering in connection with his attempts to conceal his use of confidential business information for his own personal gain.
The verdict stems from an indictment brought last year by the U.S. Attorney’s Office for the Southern District of New York (USAO), which accused Chastain of engaging in (1) wire fraud based on an insider trading scheme involving misappropriated confidential information and (2) money laundering. Specifically, the USAO charged Chastain with using information about which NFTs would be displayed on the OpenSea homepage, purchasing certain NFTs before they were featured on OpenSea, and then selling them once their value spiked. He then allegedly tried to hide his conduct by using anonymous Ethereum addresses and OpenSea accounts. In whole, he received more than $50,000 in profits through the scheme. By not asserting an “insider trading” cause of action under the criminal securities fraud statute, the USAO avoided the significant burden of proving beyond a reasonable doubt that the subject NFT transactions qualified as offers or sales of securities.
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