On Wednesday he was arrested by the FBI in New York and charged, in a case that could prove concerning for others in crypto who assumed that practices banned in regulated markets were fair game in the wild west sector.<\/p>\n
Chastain is accused of using his insider knowledge of which tokens were going to be featured on the front page of OpenSea\u2019s website to buy them shortly before they were featured, and sell them immediately, cashing in on the increased awareness for a small profit each time.<\/p>\n US attorney Damian Williams said: \u201cNFTs might be new, but this type of criminal scheme is not \u2026 Today\u2019s charges demonstrate the commitment of this office to stamping out insider trading \u2013 whether it occurs on the stock market or the blockchain.\u201d<\/p>\n Chastain\u2019s alleged trades had been noticed at the time. Thanks to the open nature of the NFT market, where all trades are written on to a public database called a blockchain, observers had spotted that someone was purchasing digital assets with questionable timing in September 2021.<\/p>\n The anonymous digital wallet used for the trades was soon linked via transactions to Chastain\u2019s own. OpenSea had not at the time issued an explicit policy against such insider trading, and acted only after Chastain\u2019s trades came to light.<\/p>\n In May, an apparent insider trading scheme was uncovered on a leading crypto exchange: a user who has not been identified would build up large positions in small cryptocurrencies shortly before they were listed on major exchanges, and then sell them for a profit in the resulting surge of interest. A Wall Street Journal report concluded that one such trade netted a profit of $140,000 on a $360,000 investment over less than a week.<\/p>\n But until Chastain\u2019s arrest this week, there was widespread debate over whether such practices were illegal, given the different norms and practices in the sector. For example the trade in so-called \u201cshitcoins\u201d \u2013 crypto assets created with no purpose other than to be bought and sold in a speculative market \u2013 is openly acknowledged to be full of practices that would be illegal in a regulated market.<\/p>\n According to pseudonymous \u201cshitcoin influencer\u201d Epitaph, the latest wheeze to boost the value of coins is focused around \u201cLarp tokens\u201d. He said this referred to \u201ctokens where the team will go to extreme lengths to convince buyers that they\u2019re connected to famous celebrities\/musicians\/larger tokens.<\/p>\n \u201cIt\u2019s no secret that everything we buy is a scam on some level. The question isn\u2019t \u2018is this token a scam,\u2019 because they all are, the question is: \u2018Is this scam done well enough to convince other people to buy?\u2019\u201d<\/p>\n Chastain\u2019s arrest comes as a group of more than 25 crypto experts have written an open letter to the US Congress calling for more regulation of the sector. \u201cWe implore you to take a truly responsible approach to technological innovation and ensure that individuals in the US and elsewhere are not left vulnerable to predatory finance, fraud, and systemic economic risks in the name of technological potential which does not exist,\u201d the group wrote.<\/p>\n Adding to the regulatory pressure, on Thursday the Commodity Futures Trading Commission sued Gemini, a New York-based crypto exchange founded by the Winklevoss twins, alleging the company misled regulators about the possibility of bitcoin price manipulation in a successful effort to convince the agency to allow the creation of a bitcoin futures contract.<\/p>\n An OpenSea spokesperson said: \u201cWhen we learned of Nate\u2019s behaviour, we initiated an investigation and ultimately asked him to leave the company. His behaviour was in violation of our employee policies and in direct conflict with our core values and principles.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" An ex-employee of the leading non-fungible tokens (NFT) marketplace has been charged with wire fraud and money-laundering offences in a sign that US law enforcement will no longer turn a blind eye to the crypto economy. Nathaniel Chastain left his job as a product manager at OpenSea, the largest marketplace for NFTs \u2013 the unique […]<\/p>\n","protected":false},"author":8,"featured_media":22856,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_post_source_name":"","_post_source_url":"","footnotes":""},"categories":[61],"tags":[11261,5722,6975,5777,2701,6378,9297,7960,11961,9784,9194,10767,6693,8918,6912,5806,7265,11399,11538,5196,8123,12354,6085,2702,10321,9372,10197,9343,10342,12791,10742,5612,990,11973,6911,12103,7287,6327,11325,7465,10329,13307,73,6348,10829,9064,3954,13309,594],"class_list":["post-22855","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-accused","tag-anonymous","tag-arrest","tag-banned","tag-behaviour","tag-bitcoin","tag-blockchain","tag-case","tag-celebrities","tag-charged","tag-charges","tag-conflict","tag-congress","tag-crypto","tag-crypto-exchange","tag-cryptocurrency","tag-damian","tag-debate","tag-digital","tag-economy","tag-eye","tag-finance","tag-fraud","tag-identity","tag-illegal","tag-influencer","tag-investigation","tag-investment","tag-law","tag-manager","tag-market","tag-money","tag-new-york","tag-one","tag-opensea","tag-price","tag-scam","tag-stock","tag-street","tag-sued","tag-trade","tag-trading","tag-twins","tag-us","tag-wall-street","tag-wall-street-journal","tag-will","tag-wire-fraud","tag-who"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/posts\/22855","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/comments?post=22855"}],"version-history":[{"count":1,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/posts\/22855\/revisions"}],"predecessor-version":[{"id":51074,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/posts\/22855\/revisions\/51074"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/media\/22856"}],"wp:attachment":[{"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/media?parent=22855"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/categories?post=22855"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/tags?post=22855"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Representations](\"https:\/\/i.guim.co.uk\/img\/media\/74dc53134c6b9d65ea4ad9ff82ed713dfae82c57\/0_163_3500_2099\/master\/3500.jpg?width=460&quality=85&auto=format&fit=max&s=641ec666b3cbb0ea2ab740aa18cdc20c\")
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