In the first NFT insider trading case, the US accuses an ex-employee of OpenSea.

A former product manager at OpenSea, the largest online marketplace for non-fungible tokens, was charged with insider trading by US prosecutors in Manhattan on Wednesday, the first such case involving digital assets.

Nathaniel Chastain, 31, of Manhattan, was accused of secretly buying 45 NFTs on 11 separate occasions based on confidential information that the tokens, or others by the same creator, would soon be featured on OpenSea’s home page.

Prosecutors claim Chastain picked which NFTs to showcase and then sold them for two to five times what he spent shortly after they were published.

Chastain is said to have more than doubled his money by buying the NFT’s “Spectrum of a Ramenfication Theory” on Sept. 14, 2021, and selling it early the next morning.

Prosecutors claimed Chastain transacted using anonymous digital currency wallets and accounts at OpenSea, also known as Ozone Networks Inc., from June to September 2021.

“While NFTs are new, this sort of criminal scheme is not,” Manhattan U.S. Attorney Damian Williams said in a statement. “Today’s accusations reflect this office’s commitment to combating insider trading, whether it takes place on the stock market or on the blockchain.”

Before U.S. Magistrate Judge Barbara Moses in Manhattan on Wednesday, Chastain pleaded not guilty to wire fraud and money laundering counts, each of which carries a potential sentence of 20 years in prison. The bail amount was set at $100,000.

“We are optimistic he will be exonerated once all the facts are revealed,” Chastain’s lawyer David Miller wrote in an email.

Non-fungible tokens are one-of-a-kind digital assets that are stored on a blockchain and show ownership of files such as artwork, other pictures, videos, and text.

According to Chainalysis Inc., a blockchain analytics business, the NFT market was worth almost $40 billion in 2021 and more than $37 billion from January to April 2022, albeit transaction activity has been moderating.

In a statement, OpenSea stated, “When we learned of Nate’s actions, we launched an inquiry and eventually asked him to leave the firm.” “His actions were against our personnel policies and directly against our basic beliefs and ideals.”

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