Former OpenSea Official Sentenced For Illegal Insider Trading

NFT auction platform, OpenSea. (Photo; Doc. NFTzxx)

JAKARTA - The former product manager of the leading NFT trading platform, OpenSea, was sentenced by District Judge after being proven to be involved in insider trading, wire fraud, and money laundering. This incident brought the spotlight on illegal practices in the crypto world.

Chastain, a former product manager of OpenSea, was sentenced to three months in prison by New York District Judge to Manhattan South District. In addition to imprisonment, the judge also added his sentence to three months of house arrest and three years of parole. Chastain is thought to have made an illegal profit of tens of thousands of dollars through this practice.

Chastain unlawfully took advantage of his position as product manager by buying large NFT tokens before the token was displayed on OpenSea front page. As a result, when the token received further exposure, Chastain sold it for a large profit. It was reported that he managed to get more than USD 57,000 (IDR 869 million) from such transactions.

While facing the legal consequences, Chastain expressed his regret in court. "Two years ago, I have disappointed the people I should have helped and forgotten my own goals. I apologize to my fellow employees and friends at OpenSea for this tragedy."

In addition to prison terms and house arrests, Chastain was required to hand over 15.98 ETH (approximately USD 26,000 or IDR 396 million) and serve 200 hours of public service as part of his sentence. He was also fined USD 50,000 (IDR 773 million). Although currently free on bail until November 2, his lawyer plans to appeal.

Although first, Chastain's lawyers argue that because NFT is not a security or commodity, charges of wire fraud should not apply. They emphasize that the majority of cases of insider trafficking are related to stocks and securities, while Chastain's case is more related to theft of trade secrets.

District Judge Jesse Furman considered that this case had serious nature and decided an "extraordinary difficult" sentence. He noted that the seriousness of these allegations may not have been so great without the context in the fast-growing cryptocurrency world. Judge Furman also highlighted the ambiguity in OpenSea's actions at the time, but concluded that Chastain was deliberately taking advantage of this situation.

Previously, federal sentences recommended a 21-month sentence of up to 27 months, but Chastain could face a maximum sentence of 20 years in prison for any offense. The state supports heavy penalties to prevent illegal practices in the crypto world and emerging markets.

This case is a warning to actors in the crypto world to comply with applicable rules and ethics, while also raising questions about how regulations should be implemented in a rapidly changing ecosystem.