It was one of last year’s largest scandals — Nate Chastain, the former head of product at OpenSea, left under a cloud after it was discovered that he purchased NFTs before they were featured on his former employer’s homepage and subsequently sold them as the increased exposure led to higher prices.
Now, the U.S. Attorney’s Office for the Southern District of New York has issued a statement that Chastain was arrested on June 1 in New York City. The FBI will charge Chastain with one count of wire fraud and one count of money laundering, each of which carries a maximum sentence of 20 years in prison.
The arrest indicates that NFTs, and perhaps crypto as a whole, are increasingly in the sights of U.S. regulators. Indeed, just last week, DeFi savings protocol PoolTogether was compelled to fundraise with NFTs to pay legal fees of their own in an ongoing legal battle.
The crypto space is no stranger to scams and bad actors — it’s called the “wild west” after all. Projects like Pixelmon rode insane hype to raise $70M only to implode upon the reveal of the project’s NFTs. Milady NFTs have been associated with grooming and other cult-like behavior. Arguably, all of self-styled “on-chain sleuth” ZachXBT’s threads could be fodder for law enforcement.
Chastain was a guest on The Defiant podcast last August, one month before the scandal broke in September. He hasn’t spoken publicly since. In the wake of the controversy, OpenSea launched a third party review, the results of which were not made public.
With the FBI stepping into the space, the happy-go-lucky culture of crypto and NFTs, where the word “ponzi” is tossed around and sometimes glorified, is unarguably threatened.