January 28, 2023

The arrested individual has utilized anonymous wallets and accounts on OpenSea to complete transactions.

The United States Justice Department accused the former OpenSea product manager of money laundering and wire fraud. Allegations suggest he took advantage of confidential business info of NFT projects anticipated on the ecosystem to make substantial returns. Moreover, this is the first-ever crypto insider trading case.

Charged for Insider Trading

Nathaniel Chastain, the 31-year-old defendant, faced charges of secretly purchasing 45 non-fungible tokens before they appeared on the OpenSea platform between June and September last year.

Meanwhile, authorities arrested Chastain (on Wednesday) and charged him with one money-laundering account and wire fraud. Each of the accounts carries a verdict of 20 years in jail. The official release shows Chastain responsible for selecting anticipated NFT projects yet to join the OpenSea homepage.

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Keep in mind that upcoming projects often boast surging prices and increasing volumes. The 31-year-old used the pre-knowledge to purchase the non-fungible tokens and sell them after listing on the network, accumulating returns of 2 – 5 times the initial buy price.

He used anonymous accounts and digital wallets on OpenSea to conceal the fraud. That is according to reports from the official release.

Michael J. Driscoll of the FBI considered the fraud an insider trading scheme. He added that lawmakers would ensure more actions to curb market manipulation undertakings within the cryptocurrency marketplace.

Authorities Targeting NFTs Scams

The surging NFTs’ popularity triggered increased crime in the space, including cases such as insider trading and rug pulls. Such events have attracted authorities globally.

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The United States Justice Department arrested two non-fungible rug-pullers in March. The individuals conducted a million-dollar Frosties scheme, charged with a plot to compel money laundering and wire fraud. Reports showed the med stole about 356.56 Ether.

A month prior, the United Kingdom tax officers discovered three non-fungible tokens worth approximately $6,700 at the time. The seizure came as the authorities investigated a financial scheme worth $1.9 million. Moreover, it was the first clampdown by the agency to confiscate NFTs.

What are your thoughts about the above subject? Should we stop trusting crypto workers? Feel free to share your opinions in the comment section below.

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