A former OpenSea manager accused of NFT insider trading was found guilty of wire fraud and money laundering in New York federal court on May 3, Reuters reported.
Nathaniel Chastain, a former product manager at OpenSea, was responsible for selecting which NFTs would appear on the site's non-fungible token marketplace, according to prosecutors. After making those decisions, prosecutors said, he often bought the NFTs and the n resold them after they were featured. On June 1, he was charged with wire fraud and money laundering in connection with the alleged transactions.
The trial began on April 24 and is being closely watched by lawyers who specialize in encryption-related issues. Some legal experts believe the outcome of the case could affect whether NFTs are considered securities. According to a May 3 report, defense attorney Daniel Filor argued in closing arguments at the trial that Chastain was not guilty because he was never told the information should be confidential, saying "no one told Nate he couldn't use or share that information."
In contrast, prosecutor Alison Nichols argued that Chastain knew he was breaking the law. She claimed he traded using an anonymous OpenSea account, suggesting he feared getting caught. "He concealed what he was doing," Nichols reportedly told the jury in h is rebuttal. "He knew he was violating OpenSea's non-disclosure agreement." This is the first time someone has come under fire for using privileged knowledge to trade non-fungible tokens.
Former Coinbase employee Ishan Wahi and his brother Nikhil were also charged with cryptocurrency insider trading in a separate July case. In this case, Nikhil Wahi pleaded guilty on September 12.
