The first case of fraud in the NFT market in the United States

US authorities have just accused a former product manager of the OpenSea digital trading platform of fraud and money laundering. The prosecutors made it clear that this was the first case of fraud involving the use of inside information in the NFT digital asset market that was detected in the United States.

According to allegations by federal prosecutors, 31-year-old Nathaniel Chastain, who during his time as product director of OpenSea last year had secretly bought dozens of NFTs that were about to be listed on the platform’s homepage, then sold them back for 2-5 times the original price after the assets were listed. Chastain is responsible for selecting the NFTs to be put on the OpenSea homepage, which is confidential information because NFT prices often skyrocket after being launched.

Prosecutors said Chastain was arrested last June 1 on fraud and money laundering charges, each of which carries a maximum penalty of up to 20 years in prison. The subject then paid bail at the bond.

NFT – short for “non-fungible tokens” – is a digital asset that certifies its authenticity, and the owner is registered on the blockchain. Each NFT has its digital signature and is usually purchased and sold in virtual currency or USD.

Federal Bureau of Investigation (FBI) assistant director Michael Driscoll emphasized that each new type of investment comes with vulnerabilities for investment participants to take advantage of, with blockchain technology with NFT products being no exception.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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