Nathaniel Chastain, a former manager at the non-fungible token (NFT) marketplace OpenSea, has made the decision to serve his three-month prison sentence for insider trading while his appeal is still pending.
Chastain’s lawyers submitted a letter to the New York District Court on Wednesday, informing the judge that their client had withdrawn his application for bail during the appeal process.
Consequently, in accordance with the court’s previous order and judgment, Chastain will voluntarily surrender himself by November 2 to commence his sentence while awaiting the outcome of his appeal.
Back in May, the former OpenSea product manager was found guilty of wire fraud and money laundering in the first insider-trading trial involving NFTs.
Chastain was accused of using confidential information to make thousands of dollars in profit by buying NFTs just before their listing on OpenSea’s homepage, where their prices would immediately increase.
Once the prices had increased, Chastain would then sell the NFTs at a profit, violating his duty to keep the information confidential.
The government alleged that he made over $57,000 in profit from his illicit actions.
Chastain Sentenced to Three Months in Jail
On August 22, Chastain was sentenced to three months in prison for engaging in insider trading on the NFT platform.
Additionally, he was ordered to pay a $50,000 fine and forfeit any illicit cryptocurrency profits derived from his trading activities on OpenSea.
During the trial, prosecuting attorney Allison Nichols argued that Chastain was fully aware that he was violating the law by executing these trades through anonymous OpenSea accounts.
Chastain had previously argued that NFTs aren’t securities or commodities and therefore aren’t subject to the government’s theory.
He also contended that he didn’t commit money laundering because the transactions were made on a public blockchain.
However, his decision to serve the prison sentence amid ongoing appeal signals a willingness to accept the consequences of his actions.
NFT Market Struggles to Recover After 2022 Crash
Once considered the next big thing in the crypto world, NFTs have failed to recover following the 2022 crypto meltdown.
Investors have seen the value of their blue-chip NFTs drop significantly, with floor prices dropping to record low levels and falling trading volume.
The prolonged downturn has even forced some NFT platforms to close down operations.
Recur, an NFT marketplace supported by billionaire Steve Cohen and renowned for its Hello Kitty NFT partnership, has announced it’s winding down due to “unforeseen challenges and shifts in the business landscape.”
Likewise, Mark Cuban-backed NFT social media platform Nifty’s has decided to cease operations, citing unsuccessful investment opportunities.
Even platforms like Blur, a leading NFT marketplace, have witnessed a staggering 96% drop in sales volume measured in Ether between late June and early August.
OpenSea, the second-largest NFT marketplace, has also seen a more than 90% drop in trading volume.
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