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Firm Memoranda

Department of Justice Brings Novel Prosecution for Insider Trading of Digital Assets

Date: 07/01/22

Last year, Cahill attorneys co-authored a New York Law Journal article predicting heightened criminal and regulatory enforcement against insider trading in digital assets. That prediction has now come true. The United States Department of Justice (“DOJ”), through the United States Attorney’s Office for the Southern District of New York (“SDNY”), has brought the first criminal prosecution for insider trading of digital assets. The indictment charges Nathaniel Chastain, a former employee of a digital asset marketplace, with one count of wire fraud and one count of money laundering for the alleged insider trading of nonfungible tokens (NFTs), a digital asset typically associated with a digital object (such as art) that provides proof of ownership over that object.

According to the indictment, Chastain was a product manager at OpenSea, the largest online marketplace for NFTs, and his responsibilities included selecting NFTs that would be featured on OpenSea’s homepage. Featured NFTs, as well as other works from the featured creator, would appreciate in value due to increased publicity and demand.

CGR Memo - Department of Justice Brings Novel Prosecution for Insider Trading of Digital Assets.pdf (pdf | 106.80 KB )