Former OpenSea Manager Opts to Serve Prison Sentence While Appeal is Pending

Nathaniel Chastain, a former head of product at NFT market OpenSea who was sentenced to a few months in jail for insider buying and selling, has elected to serve his sentence whereas his enchantment is pending.

Chastain’s authorized staff filed a letter with a New York District Court docket on Wednesday, to tell the decide of his resolution to withdraw his utility for bail pending enchantment.

As per the courtroom’s prior order, Chastain will self-surrender by November 2, commencing his jail sentence whereas his enchantment course of is ongoing.

OpenSea was as soon as the world’s largest market for NFTs—distinctive digital tokens linked to content material, similar to artwork or music, offering proof of possession. Prior to now 24 hours, it noticed buying and selling volumes exceeding $2.4 million, second to rival market Blur, which had buying and selling volumes of greater than $5 million, per DappRadar.

Chastain performed a major function at OpenSea, the place he had management over figuring out which NFTs and collections could be featured on the platform’s homepage. This publicity drastically elevated the visibility of those NFTs, probably affecting their costs.

To hide his trades, Chastain allegedly created a number of digital wallets and accounts to amass and promote NFTs that have been set to be featured on the platform.

Insider buying and selling refers back to the unlawful apply of shopping for or promoting a publicly traded firm’s securities, similar to shares or choices, based mostly on personal and confidential data usually identified solely to firm insiders, similar to executives, staff, or board members.

Insider buying and selling is illegitimate within the majority of jurisdictions as a result of it offers people an unfair benefit and undermines the precept of honest and clear monetary markets.

First-ever insider buying and selling scheme involving digital belongings

The insider buying and selling allegations towards the previous OpenSea exec revolve round his buy of 45 NFTs earlier than that includes them on {the marketplace} and reselling these NFTs at a revenue as soon as their costs had appreciated.

The FBI and U.S. Division of Justice (DOJ) accused Chastain of illegally making greater than $50,000 in revenue from buying and selling NFTs when he was arrested in June 2022. Again then, the authorities mentioned it was the first-ever insider buying and selling scheme involving digital belongings. Chastain has since been ordered to return his ill-gotten features.

Prosecutor Allison Nichols claimed that Chastain was absolutely conscious that his actions constituted a violation of the legislation, as he used nameless OpenSea accounts for his trades to hide his id.

Attorneys for the previous OpenSea exec, nonetheless, argued that the data Chastain used was not confidential. In addition they insisted that NFTs aren’t securities and so the case should be dismissed.

Nonetheless, though a decide was not satisfied and let the case proceed to trial, Chastain, who initially confronted as much as 20 years in jail, acquired off calmly, with a sentence of simply three months in jail.