A former OpenSea executive has been sentenced to three months in prison and fined $50,000 for NFT insider trading.
- The executive bought 45 NFTs during June-September 2021 using different anonymous wallets prior to sale.
- He then resold them for more than $50,000.
A federal judge sentenced former OpenSea product manager Nathaniel Chastain to prison for insider trading on the non-fungible token [NFT] platform, announced the U.S. Department of Justice on 22 August.
U.S. Attorney Damian Williams said that the court sentenced Chastain to three months in jail, three months in home confinement, and three years in supervised release. The court also fined him $50,000 and ordered him to surrender ill-gotten Ethereum [ETH] from NFT sales.
Chastain was accused of insider trading during his stint at OpenSea. As a product manager, he held the power to select the NFTs to be listed on the OpenSea platform. During June-September 2021, he purchased 45 NFTs using different anonymous wallets prior to these NFTs being added on the sales platform. He then resold them for more than $50,000.
The U.S. authorities charged and arrested Chastain in June 2022. A jury found him guilty of wire fraud and money laundering in May 2023. The latest court order, most likely, brings the case to its conclusion.
The judge added that though the crime amounted to stricter punishment, Chastain’s sentence is lenient because he didn’t make extraordinary earnings from the sale.
U.S. Attorney Damian Williams said,
“Nathanial Chastain faced justice today for violating the trust that his employer placed in him by using OpenSea’s confidential information for his own profit. Today’s sentence should serve as a warning to other corporate insiders that insider trading – in any marketplace – will not be tolerated.”
Is NFT winter creeping into Q3?
The NFT market has been facing a decline in its fortunes for some months now. It seems this winter has nowhere to go.
According to a report by the Web3 development platform Alchemy, NFT trading volume plummeted 41% in the second quarter of 2023.
Another report by DappRadar, July saw some of the lowest NFT sales in 2023. NFT trading volume in July fell 29% to $632 million, compared to May. The number of NFT sales in July similarly dropped 23% to 3.7 million during the same time period as well.
Meanwhile, the floor prices of top-tier collections such as Bored Ape Yacht Club [BAYC] and Azuki dipped to two-year lows.