Chastain had been accused of leveraging his knowledge of which NFTs would be featured on OpenSea’s homepage to profit financially. Between June and September 2021, he allegedly made around $57,000. He was purchasing dozens of NFTs, waiting for their value to rise on the back of OpenSea’s promotion, and then selling them at two to five times their initial purchase price.
Prosecutors cited Chastain’s use of anonymous OpenSea accounts and wallets for the purchases as proof that “he knew that he had violated OpenSea’s confidentiality agreement.” However, Chastain’s lawyers argued that he had not violated OpenSea’s policies and was being held to a standard that did not exist. “Nobody told Nate that he couldn’t use or share that information,” Chastain’s lawyer Daniel Filor told jurors.
The case has been closely watched by the NFT and cryptocurrency industry, as it has the potential to set a precedent for future cases involving insider trading and fraudulent activity in the sector. The U.S. Attorney’s office in Manhattan brought charges against Chastain in June 2022 as part of a series of cases related to digital assets.
According to court documents, Chastain had pleaded not guilty to the charges. At the same time, OpenSea CEO had previously told prosecutors that the case against Chastain was “unfair” and that it impacted his mental health. Before the trial, Chastain had filed five motions to drop evidence regarding his OpenSea compensation and exclude terms such as insider trading – arguing that NFTs are not securities. However, Judge Jesse Furman denied the motion and said Chastain’s insider trading arguments were “moot” in April.
Chastain is due to be sentenced on August 22, 2023. Both wire fraud and money laundering carry a maximum sentence of 20 years in prison.
Crypto and NFT (non-fungible token) scams are unfortunately common in the world of digital assets. Here are a few examples of standard ones to watch out for:
It’s important to stay vigilant and do your research before investing in any cryptocurrency or NFT. Always be wary of deals that seem too good to be true, and never give out your private keys or passwords to anyone.
And in case you find yourself a victim of one such scam, contact Global Fraud Protection! Our CipherTrace analysts can help you track and trace your digital coins and start legal action for fund recovery!