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U.S. charges OpenSea ex-employee in first NFT insider trading case

New York, June 1 (Reuters)-US prosecutor in Manhattan charged a former product manager of OpenSea, the largest online marketplace for non-fungible tokens, in insider trading on Wednesday.

Nathaniel Chastain, 31, from Manhattan, secretly purchased 45 NFTs in 11 batches based on sensitive information that tokens or other tokens by the same creator will soon be posted on the OpenSea homepage. Was accused of.

According to the prosecutor, Chastain chose which NFT to refer to and immediately after being introduced, sold the NFT for two to five times the amount he usually paid.

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In one example, Chastain is said to have more than quadrupled his money by purchasing the NFT “Spectrum of Ramenfication Theory” on September 14, 2021 and selling it early the next morning. ..

Prosecutors said the plan took place from June to September 2021 and Chastain traded through an anonymous digital currency wallet and account at OpenSea (also known as Ozone Networks Inc).

“NFTs may be new, but this type of crime plan is not,” Manhattan’s US lawyer Damian Williams said in a statement. “Today’s rates show this office’s commitment to eliminate insider trading, whether it occurs on the stock market or on the blockchain.”

Chastain was acquitted on Wednesday in front of Magistrate Judge Barbara Moses in Manhattan for fraud and money laundering, each with a maximum of 20 years’ imprisonment. The bond was set at $ 100,000.

“When all the facts are known, we are confident that he will be falsely accused,” Chastain’s lawyer David Miller said in an email.

Non-fungible tokens are unique digital assets recorded on the blockchain that reflect ownership of artwork, other images, videos, text, and other files.

According to blockchain data company Chainalysis Inc, although trading activity is stable, the NFT market totaled about $ 40 billion in 2021 and more than $ 37 billion between January and April 2022.

“When we learned of Nate’s actions, we started an investigation and eventually asked him to leave the company,” OpenSea said in a statement about Chastain. “His actions violated the policies of our employees and were directly against our core values ​​and principles.”

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Report by Jonathan Stempel in New York. Additional report by Luc Cohen of New York.Edited by Richard Chan and Bernard O

Our criteria: Thomson Reuters trusts the principles.

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