Former OpenSea manager to forfeit 15.98 Ethereum tokens following insider trading case sentencing
- Ex-OpenSea manager Nathaniel Chastain will spend the next three months in jail on wire fraud, money laundering, and insider trading charges.
- The manager chose what tokens to feature on OpenSea's home page, boosting prices, almost similar to charges against Hex founder.
- Like in the case of Binance and CEO Changpeng Zhao, Chastain's case marks a path for prosecutors to crack down on fraud in new and nontraditional markets.
Fortune Crypto reports that the former manager at OpenSea, Nathaniel Chastain, was sentenced to three months imprisonment for insider trading, among other charges, in the digital asset space.
OpenSea former executive to pay up to $26,000 in ETH
Chastain, marking the first insider trading conviction in the digital asset space, will spend the next three months in jail just like FTX founder and former CEO Sam Bankman-Fried. The executive is charged with using confidential information for self-gain.
Specifically, he made thousands of dollars choosing the tokens that would feature on digital asset marketplace OpenSea's home page, thereby helping bloat their prices. Chastain also leveraged his position to identify digital asset projects slated for listing, acquired them, and sold them at 5X their original value.
Chastain is also charged with wire fraud and money laundering after a jury in a New York federal court found him guilty of self-gain through confidential information.
In the culmination of both cases, the US District of New York Judge Jesse M. Furman has asked Chastain to forfeit up to 15.98 Ethereum (ETH) tokens, worth approximately $26,100 at current rates, alongside a $50,000 fine besides a three-month jail term.
In an admission of guilt, the former OpenSea executive has expressed remorse. Nevertheless, with the case forging a path for "prosecutors to clamp down on fraud in new and nontraditional markets," Chastain joins the list of digital asset executives who are at odds with the authorities for violating US federal laws.
Prosecutors, regulators cracking down on fraud and criminal behavior in the digital asset space
Binance exchange's Changpeng Zhao (CZ) also faces fraud, money laundering, and securities law violation charges among them. These charges have been imposed by the US Commodities Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC). It is worth mentioning that CZ has denied the charges levied against him.
Coinbase Global Inc.'s manager also went through a similar experience when Manhattan US Attorney Damian Williams established that he traded confidential information concerning the exchange's move to list new tokens.
Hex and Pulsechain founder Richard Heart is also a case in point, accused of raising $1 billion by offering unregistered securities and unlawfully selling crypto assets. Like Chastain, Heart is also cited for inflating the value of "securities" sold to retail investors. Other charges imposed on the Hex executive include misappropriating at least $12 million of offering proceeds to purchase luxury goods.
The list of criminal charges relating to traditional insider trading continues to grow, focused on securities fraud charges with the digital asset executives being called out for using confidential information for self-gain. It points to US regulators and prosecutors joining hands in pursuing all digital asset players believed to be operating contrary to the statutes under securities laws.
Ethereum FAQs
What is Ethereum?
Ethereum is a decentralized open-source blockchain with smart contracts functionality. Serving as the basal network for the Ether (ETH) cryptocurrency, it is the second largest crypto and largest altcoin by market capitalization. The Ethereum network is tailored for scalability, programmability, security, and decentralization, attributes that make it popular among developers.
What blockchain technology does Ethereum use?
Ethereum uses decentralized blockchain technology, where developers can build and deploy applications that are independent of the central authority. To make this easier, the network has a programming language in place, which helps users create self-executing smart contracts. A smart contract is basically a code that can be verified and allows inter-user transactions.
What is staking?
Staking is a process where investors grow their portfolios by locking their assets for a specified duration instead of selling them. It is used by most blockchains, especially the ones that employ Proof-of-Stake (PoS) mechanism, with users earning rewards as an incentive for committing their tokens. For most long-term cryptocurrency holders, staking is a strategy to make passive income from your assets, putting them to work in exchange for reward generation.
Why did Ethereum shift from Proof-of-Work to Proof-of-Stake?
Ethereum transitioned from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) mechanism in an event christened “The Merge.” The transformation came as the network wanted to achieve more security, cut down on energy consumption by 99.95%, and execute new scaling solutions with a possible threshold of 100,000 transactions per second. With PoS, there are less entry barriers for miners considering the reduced energy demands.
Author
Lockridge Okoth
FXStreet
Lockridge is a believer in the transformative power of crypto and the blockchain industry.
