Former OpenSea employee withdraws bail request and will start serving 3-month sentence for NFT ‘insider trading’

Nate Chastain, 33, withdrew his request for bail in a Wednesday letter to the federal judge overseeing his case. He will surrender before Nov. 2 and start serving a three-month sentence.

Chastain was sentenced last month in what the Justice Department describes as the first “digital asset insider trading scheme.” Chastain, a former employee at OpenSea, one of the largest NFT marketplaces, used non-public information about which non-fungible tokens were to appear on the website’s homepage to personally pocket more than $50,000. As part of his sentence, Chastain was ordered to pay a $50,000 fine and forfeit 15.98 in Ethereum tokens, worth just under $26,000 as of Thursday.

Chastain faced up to 20 years in prison for each of the two counts he faced, but prosecutors asked for something in line with the federal sentencing guidelines of between 21 months and 27 months to send a message to future fraudsters. In the end, he received a much shorter sentence.

The ex-OpenSea employee’s case was publicly labeled insider trading, but prosecutors more broadly pursued the charge of wire fraud. Chastain’s lawyers argued unsuccessfully that the case should be dismissed because traditionally insider trading cases deal with securities. The Justice Department later took a similar approach against an ex-Coinbase employee who was sentenced to two years in prison for tipping off his brother and a friend about which coins were soon to be listed on the crypto exchange.

At his sentencing last month, Chastain said he regretted orchestrating the scheme.

“I am here today because two years ago I let down the community I was serving and lost sight of the person I aspired to be,” he said at the hearing. “I’m sorry for putting my colleagues and friends at OpenSea through this ordeal.”