Nathaniel Chastain – former head of product at the NFT marketplace OpenSea – will spend three months in jail after being found guilty of insider trading. Prosecutors maintained that he bought numerous non-fungible tokens before they were featured on the platform’s home page and later sold them at much higher prices. 

Chastain maintained he was not guilty of the accusations that he conducted wire fraud since the NFTs were not securities or commodities. US District Judge Jesse Furman dismissed that claim, asserting that the law doesn’t require trading in such financial products for it to be a fraud.

First Insider Trading Case Involving NFTs

The case against Chastain was partially finalized in May this year when a jury found him guilty of wire fraud and money laundering. The magistrates ordered him to forfeit 15.98 ETH (worth around $26,000 at the time) and pay a $50,000 fine.

In addition, the authorities determined in a recent court hearing that he was involved in insider trading, making over $57,000 by purchasing digital collectibles before OpenSea featured them on its home page and later selling them at substantial profits.

As such, the 33-year-old will go to prison for three months in what will be known as the first-ever insider trading case related to NFTs. He did not oppose the court’s decision, admitting that he let the community down with his actions:

“I am here today because two years ago, I let down the community I was serving and lost sight of the person I aspired to be. I’m sorry for putting my colleagues and friends at OpenSea through this ordeal.”