{"id":34717,"date":"2022-06-03T07:05:15","date_gmt":"2022-06-03T07:05:15","guid":{"rendered":"https:\/\/harchi90.com\/fbi-sets-sights-on-crypto-economy-with-arrest-of-former-opensea-staffer-non-fungible-tokens-nfts\/"},"modified":"2022-06-03T07:05:15","modified_gmt":"2022-06-03T07:05:15","slug":"fbi-sets-sights-on-crypto-economy-with-arrest-of-former-opensea-staffer-non-fungible-tokens-nfts","status":"publish","type":"post","link":"https:\/\/harchi90.com\/fbi-sets-sights-on-crypto-economy-with-arrest-of-former-opensea-staffer-non-fungible-tokens-nfts\/","title":{"rendered":"FBI sets sights on crypto economy with arrest of former OpenSea staffer | Non-fungible tokens (NFTs)"},"content":{"rendered":"
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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.<\/p>\n

Nathaniel Chastain left his job as a product manager at OpenSea, the largest marketplace for NFTs – the unique crypto assets used to denote ownership of items such as digital art – after being accused of insider trading.<\/p>\n

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’s 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

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US attorney Damian Williams said: “NFTs might be new, but this type of criminal scheme is not\u2026 Today’s charges demonstrate the commitment of this office to stamping out insider trading – whether it occurs on the stock market or the blockchain.”<\/p>\n

Chastain’s 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’s own. OpenSea had not at the time issued an explicit policy against such insider trading, and acted only after Chastain’s 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’s 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 – crypto assets created with no purpose other than to be bought and sold in a speculative market – 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’re connected to famous celebrities \/ musicians \/ larger tokens.<\/p>\n

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