NFT insider trading: former OpenSea product manager found guilty

The former product manager of the marketplace OpenSea has been recognized guilty of having bought and sold NFT by having privileged knowledge allowing him to know that their value would increase.

Accused of using confidential information of his former employer for his sole benefit, Nate Chastainthe former product manager of the NFT marketplace OpenSeawas convicted by a U.S. court on Wednesday, reports Reuters.

He abused his status at OpenSea to line his pockets, and he lied to cover his tracks,” said prosecutor Thomas Burnett.

Last summer, the U.S. Department of Justice filed charges against Chastain, saying he used confidential material to buy dozens of non-fungible tokens before they are presented, to the general public, on the OpenSea homepage.

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Lawyers for Chastain, who had pleaded not guiltyThe former employee of OpenSea argued that there was no policy at OpenSea prohibiting the acquisition of the NFTs involved and that the platform only began to put rules in place when the case became public. The 32-year-old former employee faces up to 40 years in prison. He will be later convicted.

According to the Financial Timeshe is the first citizen to be recognized guilty in an NFT insider trading case in the United States.

But the verdict wouldn’t necessarily open the floodgates for a wave of similar cases. “I’m not sure it opens the floodgates because the charges here and the verdict are really far from Whether an NFT is a security Joshua Newville, a partner at the law firm Proskauer, explained.

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At the time of the incident, OpenSea was the largest platform for buying and selling NFT in terms of volume. The Blur marketplace launched in the fall of 2022 has been dethroning the pioneer for a few months with higher transaction volumes, according to Defillama data.

In April, OpenSea unveiled OpenSea Pro, a aggregator NFT marketplace aggregator.

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