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Nathaniel Chastain, a former product manager at the online marketplace OpenSea, was charged with using inside information to profit on NFTs, or nonfungible tokens, that were slated to appear on the company’s home page, according to a New York indictment unsealed Wednesday.

Chastain allegedly bought up NFTs in advance of their being featured on OpenSea’s front page and then resold them “at profits of two to five times his initial purchase price,” according to the Department of Justice.

“NFTs might be new, but this type of criminal scheme is not.  As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself.  Today’s charges demonstrate the commitment of this Office to stamping out insider trading – whether it occurs on the stock market or the blockchain,” U.S. Attorney Damian Williams said.

The indictment comes a couple of months after OpenSea detected that one of their employees purchased items that they knew were set to display on their front page before they appeared there publicly. “We are taking this very seriously and are conducting an immediate and thorough third party review of this incident so that we have a full understanding of the facts and additional steps we need to take,” reads part of a statement published September last year.

Since then, as part of combating nefarious activities, the company has prohibited team members from buying or selling from featured or promoted collections or creators and also barred its staff from “using confidential information to purchase or sell any NFTs, whether available on the OpenSea platform or not.” 

It is alleged that he conducted dozens of transactions on OpenSea using anonymous digital currency wallets and anonymous accounts to conceal his activities, according to the DOJ.

“With the emergence of any new investment tool, such as blockchain supported non-fungible tokens, there are those who will exploit vulnerabilities for their own gain. The FBI will continue to aggressively pursue actors who choose to manipulate the market in this way,” said FBI Assistant Director-in-Charge Michael J. Driscoll.

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