Following reports of insider trading last year, OpenSea said it was conducting a thorough third party review of the incident. The platform said it initiated countermeasures to make sure such incidents do not repeat.

The NFT marketplace executive was on Wednesday charged in the first ever digital asset insider trading scheme. A press release by the U.S. department of justice said the defendant allegedly traded on inside information about NFTs. The statement added that the NFTs were scheduled to be featured on OpenSea’s homepage.

In this connection, Chastain was on Wednesday arrested in New York. The department said he will be presented in the United States District Court for the Southern District of New York.

Insider Trading Charges

U.S. attorney Damian Williams said,

“NFTs might be new, but this type of criminal scheme is not.  As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself.  Today’s charges demonstrate the commitment of this office to stamping out insider trading, whether it occurs on the stock market or the blockchain.”

Meanwhile, FBI assistant director-in-charge Michael J. Driscoll said Chastain launched an age-old scheme to commit insider trading. He committed the scheme by using his knowledge of confidential information to purchase dozens of NFTs before they featured on the platform.

“With the emergence of any new investment tool, such as blockchain supported non-fungible tokens, there are those who will exploit vulnerabilities for their own gain. The FBI will continue to aggressively pursue actors who choose to manipulate the market in this way.”

Info On Dozens Of OpenSea NFTs

The attorney stated that Chastain was responsible for selecting NFTs that featured on the NFT platform. As part of his employment, Chastain was responsible for selecting NFTs to be featured on OpenSea’s homepage, it said.

“From at least in or about June 2021 to at least in or about September 2021, Chastain used OpenSea’s confidential business information.” The information was about what NFTs were going to be featured on the homepage to secretly purchase dozens of NFTs shortly before they were featured.

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