Jurors have begun deliberating in the fraud case against former OpenSea employee Nate Chastain. Chastain was fired from the NFT marketplace on charges of insider trading. What is happening with the criminal investigation against him?
What is happening with the OpenSea fraud case?
Nate Chastain, a former product manager for OpenSea and its most public-facing Twitter presence, was a popular NFT personality during the NFT bull market of 2021. He promptly answered other users’ questions on Twitter and developed a reputation for helping to resolve issues with the OpenSea NFT platform.
In September 2021, however, Chastain was accused of insider trading. He allegedly front-ran collections that were due to be featured on the front page of OpenSea. Chastain did this maneuver by buying them with anonymous wallets before they were featured on the homepage. After the NFTs went up in value from being listed on OpenSea’s homepage, Chastain subsequently sold them for profit.
Manhattan Federal prosecutors charged Chastain in June 2022 with netting more than $50,000 in illegal profits. The charges against him include one count of wire fraud and one count of insider trading.
Prosecutor Thomas Burnett stated, “He knew that when he came up with a plan for what to feature on OpenSea’s website, he was supposed to use that for the company, not for his own gain. His greed won out.”
Will Chastain be found guilty?
It remains unclear at this point. Daniel Filor, Chastain’s lawyer, said his client did not break the company’s rules. He stated, “Nate’s choices in his head about which NFT to feature weren’t considered by OpenSea to be confidential.”
Burnett disagrees. The prosecutor pointed to Chastain’s usage of anonymous wallets as proof of guilt. He claimed, “If the defendant thought there was no problem using inside information to buy NFTs, he could have just used regular accounts. He did that to throw people off his scent.”
Either way, we should find out soon. The case is being followed closely as this decision is sure to have wide-ranging implications for laws governing Web3 moving forward.