Morning Minute | Inside Trading Sends Former OpenSea Employee to Jail

Morning Minute | Inside Trading Sends Former OpenSea Employee to Jail

TylerD's Market Summary

Nate Chastain is facing 3 months in prison on top of $50k in fines in the first-ever digital asset inside trading scheme to be convicted. Did the punishment fit the crime?

๐Ÿ‘ฎ‍โ™‚๏ธ Nate Chastain Goes to Prison

The first-ever digital asset inside trading scandal may be coming to a close.

Yesterday, former OpenSea employee Nate Chastain was officially sentenced to 3 months in prison for an inside-trading scheme.

Now that the sentence is finally in, the question becomes - did he get off light? And who's next?

What Happened

As a quick recap, Nate Chastain used his position as a Product Manager at OpenSea to promote projects on its homepage from June-Sept 2021 while simultaneously using anonymous wallets to trade them for profit.

Onchain sleuths pointed out the activity back in 2021, which led to Nate's exit from OpenSea.

He was officially convicted of wire fraud and money laundering at trial.

How much did he make via these crimes? 15.98 ETH.

Not a tiny sum, but also not a major windfall. For those actively trading in Summer 2021, many traders were making 16+ ETH per month (if not per week) back in those days.

And now he pays the price.

The full penalty entails:

  • 3 months in prison
  • 3 months home confinement
  • 200 hours of community service
  • Fine of $50,200
  • Forfeiture of 15.98 ETH

So he had to give the profits back, got fined another $50k, and is getting 3 months in prison - on top of losing his job and likely career options in Web3.

Does the punishment fit the crime?

Reactions to Nate's Sentence

NFT and Crypto Twitter seem to be falling into 2 camps - that the penalty was way too light or too severe.

Deeze weighed in, calling it a "Good deal but bad deal too" after referencing the 30 ETH fine and also comparing it to the other scams that have thus far gone unpunished in the space.

On the flip side, Martin Shkreli also joined the convo, saying "the shortest sentence known to man" and going on to clarify that "they say that if you get less than 10 years as a federal sentence, there was no point in charging you. no one gets less than a year. 'a year and a day' is considering the shortest federal sentence. 3 months is like... unheard of."

My initial reaction was that the penalty felt heavy for the crime, specifically the amount gained (16 ETH or around $50k).

But at the same time, inside trading has to be punished at least somewhat severely or no one will be prevented from doing it. And many are saying that 3 months isn't enough to prevent bad actors from following in Nate's footsteps here - hard to disagree with them.

Why It Matters

While this was a fairly heavily publicized case from the beginning, it shows how justice can indeed be served years after a digital crime is committed.

And just because many of the scams and hacks we have seen in the space over the past few years have gone unpunished, the actions are still recorded on the blockchain.

I personally expect an enforcement wave to come in the next 1-3 years. This is just the beginning.

Bad actors should be on alert and looking over their shoulders - the feds are coming.

๐Ÿšš What else is happening in NFTs?

Here is the list of other notable headlines from the day in NFTs:

๐ŸŒŽ Around Crypto and Web3

A few other Crypto and Web3 headlines that caught my eye:

  • The crypto market fell slightly on Tuesday; BTC -0.5% at $25,930; ETH -1.3% at $1,640; BTC did fall below its 200-day moving average for first time since Luna collapse
  • The Base L2 has recorded more daily transactions than Ethereum and other popular L2s Arbitrum and Optimism for the first time in its short history
  • Mercedes-Benz announced its next NFT collection NXT Icons, a collection of digital re-interpretations of iconic Mercedes designs; there will be 7 Eras with 2,700 NFTs each, and holders of their 1st NFT Maschine get 1 free Mint Pass
  • The Weeknd is teaming up with Binance to bring his "After Hours Til Dawn" tour to Australia and New Zealand, where they will introduce Souvenir and Tour NFTs for fan engagement
  • ONE Store, Korea's high-achieving app market, is partnering with Polygon Labs to support web3 games and dApps for its upcoming global launch

๐Ÿš€ NFT Total Volume

  • BAYC (1,584 ETH, 23.45 ETH Floor)
  • DeGods (737 ETH, 3.53 ETH)
  • MAYC (555 ETH, 4.47 ETH)
  • Azuki (365 ETH, 3.52 ETH)
  • Captainz (250 ETH, 3.3 ETH)

๐Ÿ“ˆ NFT Floor Price Increase

  • Cult (43%, 0.6 ETH Floor)
  • Mutant Hounds (28%, 0.14 ETH)
  • Nakamigos (22%, 0.32 ETH)
  • 0n1 Force (8%, 0.64 ETH)
  • Kaiju Kingz (8%, 0.11 ETH)

๐Ÿ—“ Upcoming NFT Mints and Reveals

Today has drops mostly focused in the art sector along with a new Reddit collection.

Memes, Floor ICONS and Art Blocks are all back with their periodic drops, and photo-artist Guido Disalle is releasing "After Hours" through Money Clicc.

The Reddit Avatar drop may very well be the highlight, with their first F1 collab coming today with Alpine F1 Team and racing-themed avatars.

If you want more, see the full list of today's drops from Swizzy's daily mint monitor

  • Memes by 6529 (11:00 a.m. ET)
  • Guido x Money Clicc "After Hours" (11:00 a.m. ET)
  • Floor ICONS (12:00 p.m. ET)
  • Mutant Hounds - Phase One of Fusing (12:00 p.m. ET)
  • Art Blocks Presents "Mycelia" (1:00 p.m. ET)
  • Reddit Alpine F1 collection (TBD)

Enjoy this write-up and/or want to sponsor the Morning Minute? Follow along with me on Twitter @tyler_did_it or reach out via email tyler.warner@luckytrader.com.

For all volume and floor price data, see Lucky Trader's Project Rankings page.

For all upcoming mints, see Lucky Trader's NFT Calendar page.

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