In June, an ex-employee of the world's largest NFT trading marketplace — OpenSea — was arrested on charges on wire fraud and money laundering related to the insider trading of non-fungible tokens.
Nathaniel Chastain, a former OpenSea product manager, runs the risk of up to 20 years of jailtime.
This marks the first time the Department of Justice has gone after someone for insider trading of NFTs.
Chastain curated the NFTs on OpenSea's frontpage, but the FBI claims that he covertly purchased NFTs prior to their listing and sometimes reaped five times the original sales price when selling them.
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“NFTs might be new, but this type of criminal scheme is not, but this type of criminal scheme is not," said U.S. Attorney Damian Williams after the announcement.
Former federal prosecutor Joshua Robbins said that the case may impact future crypto-related cases and even insider trading laws. Robbins says it is not clear yet if mail fraud or wire fraud will continue to be a method for prosecuting insider trading.
NFTs have recently exploded in popularity, coming up to a record-breaking $44.2 billion in 2021, according to Chainalysis data. NFTs only ratcheted up $106 million in 2020. However, the growth of digital collectibles has. seen an uptick in NFT-related crimes, with Chainalysis detecting $8.6 billion of crimes related to money laundering in the crypto space.