Nathaniel Chastain, previously a manager at the NFT marketplace OpenSea, has opted to begin his three-month prison term for insider trading, even as his appeal is under consideration.
On Wednesday, Chastain’s legal team presented a letter to the New York District Court, notifying the presiding judge that Chastain has rescinded his request for bail during the appellate process.
As a result, based on the court’s prior ruling, Chastain will willingly report for his sentence by November 2, serving his time while the final verdict on his appeal is awaited.
In May, the ex-product manager of OpenSea was convicted of wire fraud and money laundering in what is known as the first insider-trading case related to NFTs.
Chastain stood accused of leveraging insider information to earn substantial profits. He allegedly purchased NFTs right before they were featured on OpenSea’s main page, where their value would naturally surge.
After the value of these NFTs went up, Chastain would sell them, capitalizing on the price spike. This act breached his obligation to maintain the confidentiality of such information.
The prosecution contended that Chastain netted over $57,000 from these unauthorized trades.
Chastain Sentenced to Three Months in Jail
On August 22, Chastain received a three-month prison sentence for his insider trading activities on the NFT marketplace.
In addition to his jail term, he was directed to pay a fine of $50,000 and relinquish any ill-gotten gains from his cryptocurrency trading on OpenSea.
Throughout the trial, the prosecutor, Allison Nichols, contended that Chastain knowingly broke the law by carrying out transactions using undisclosed accounts on OpenSea.
Chastain had earlier posited that NFTs don’t fall under the categories of securities or commodities, implying that they shouldn’t be bound by the government’s interpretation in this case.
He also made the case that his actions couldn’t be classified as money laundering since all transactions were conducted on a transparent public blockchain.
Nonetheless, his choice to begin his prison term while his appeal is still in progress indicates a readiness to face the repercussions of his deeds.
NFT Market Struggles to Recover After 2022 Crash
Once hailed as the upcoming sensation in the realm of cryptocurrency, NFTs haven’t managed to bounce back after the crypto crash of 2022.
Investors have witnessed a sharp depreciation in the value of their premier NFTs, with the base prices plummeting to unprecedented lows, accompanied by a decrease in trading volume.
This extended slump has compelled certain NFT platforms to cease operations.
Recur, an NFT marketplace that had the backing of billionaire Steve Cohen and was notably associated with a Hello Kitty NFT collaboration, recently declared its decision to shut down, citing “unexpected challenges and changes in the business environment.”
Similarly, Nifty’s, an NFT social media platform supported by Mark Cuban, has chosen to halt its services due to failed investment ventures.
Other major players haven’t been spared either. Blur, a prominent NFT marketplace, experienced a dramatic 96% decline in sales volume, measured in Ether, from the end of June to the beginning of August.
OpenSea, standing as the second-largest NFT marketplace, has also reported a decline exceeding 90% in its trading volume.