An OpenSea executive purchased NFTs that would be allocated great real estate and then sold them for a profit.
The former head of product at prominent non-fungible token (NFT) marketplace OpenSea was charged with wire fraud and money laundering in connection with insider trading of NFTs. According to the DOJ, this is the first insider trading prosecution involving digital assets.
It all began in September of last year, when OpenSea users discovered something unusual about Chastain’s crypto wallets. Prosecutors said they bought NFTs just before they were featured on the site’s homepage, then sold them once their prices had risen (typically 2x–5x the original amount).
After being notified of the transactions, OpenSea virtually accepted that insider trading was occurring and asked Chastain to leave the company in September after an inquiry. (At the time of writing, Chastain was working on a new NFT project called Oval.) His charges entail a maximum sentence of 20 years in jail.
Why it matters:
With a 65% market share, OpenSea is by far the largest NFT marketplace. It was valued $13.3 billion at the time, which was more than some biggest companies are worth. As a result, a loss of trust for OpenSea is a loss of credibility for the entire NFT business.