Former Opensea product manager Nate Chastain was arrested by the FBI early Wednesday morning in New York City and charged with wire fraud and money laundering in connection with an elaborate NFT insider trading scheme.
In a press release, The Department of Justice claims Chastain used his advanced, confidential knowledge about which NFTs would be featured on Opensea’s platform to secretly buy them using several anonymous crypto wallets and sell them for up to five times their original value.
“NFTs might be new, but this type of criminal scheme is not,” U.S. Attorney Damian Williams said. “As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself.”
Following the indictment, Opensea condemned Chastain’s action and terminated his employment following an investigation.
Twitter users noticed what Chastain was doing last fall. Several users claimed they saw Chastain using a number of secret crypto wallets to purchase NFTs from collections prior to their release. Shortly after, a Chinese cryptocurrency news platform claims to have analyzed the wallet activity and alleged Chastain made off with around $67,000 in Ether coin (ETH) from the scheme.
The company was then forced to acknowledge this in a public blog post, but they did not mention Chastain by name. Instead, OpenSea simply said they had “learned that one of our employees purchased items that they knew were set to display on our front page before they appeared there publicly.”
If you see something out of place or would like to contribute to this story, check out our Ethics and Policy section.