Yesterday, a jury in Manhattan federal court found former OpenSea product manager, Nathanial Chastain, guilty of wire fraud and money laundering for allegedly using inside company information to front-run trades of NFTs featured on OpenSea’s homepage. The government charged that Chastain profited in excess of $50,000 by front-running trades of NFTs that were to be featured on OpenSea’s homepage. According Reuters, Assistant United States Attorney Thomas Burnett told the jury that Chastain "abused his status at OpenSea to line his own pockets, and he lied to cover his tracks" Reuters

Chastain now awaits sentencing. His sentencing will be determined in-part based on sentencing guideline estimates generated by the United States Probation Office. The probation office will ultimately release a PSR to the court and the parties summarizing the facts and evidence proven at trial and an advisory guideline imprisonment range for the court to consider at sentencing. Federal judges are not bound by these guideline estimates and have the discretion to deviate either above or below the proposed advisory sentencing guideline range. Crypto Criminal Defense Lawyer Bog 

DOJ announced that Gary James Harmon of Cleveland, Ohio, was sentenced to four years and three months in federal prison for stealing over 712 bitcoin. The bitcoin, which was worth approximately $4.8 million at the time of the theft, were the proceeds of the darknet bitcoin mixer Helix and subject to forfeiture in a then-pending criminal case against Harmon's brother, Larry Dean Harmon. 

Larry Harmon was arrested in February 2020 for operating Helix, a darknet-based cryptocurrency money laundering service, also known as a "mixer" or "tumbler." Helix allegedly laundered over 350,000 bitcoin, valued at more than $300 million at the time, on behalf of its customers, primarily from darknet markets. Following the arrest, law enforcement seized various assets, including a cryptocurrency storage device that contained Larry Harmon's illegal proceeds generated through the operation of Helix. However, the device's additional security features initially prevented law enforcement from recovering the bitcoin. Crypto Criminal Defense Lawyer Blog 

While in New York last week attending a CLE conference, I took a moment to visit the United States District Courthouse for the Southern District of New York in Manhattan and watch some of the Nathaniel Chastain federal criminal trial. As I have previously blogged:

In May of 2022, Former OpenSea employee, Nathaniel Chastain, was indicted on one count of wire fraud, in violation of 18 U.S.C. § 1349, and one count of concealment money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i). The government essentially accuses Chastain of using his insider knowledge to profit from NFTs featured on OpenSea's homepage. Chastain was responsible for selecting NFTs that would be featured on OpenSea’s homepage. The government alleges Chastain abused his position by buying featured NFTs and then selling it at a profit using anonymous accounts. Crypto Criminal Defense Lawyer Blog

The defense reseted its case on Friday and the Judge scheduled closing arguments for Monday, May 1, 2023. Yesterday the parties made their closing arguments and the case is now with the jury for deliberations. Crypto Criminal Defense Lawyer Blog 

I had the pleasure of speaking this weekend at the New York State Bar Association’s CLE conference at NYU entitled: Deep Dive Into The Metaverse And Web3: The First Global Law Symposium on the topic of money laundering and blockchain crime. 

The conference was put on by the State Bar’s Task Force on Emerging Digital Finance and Currency—which is leading the nation in helping to educate and on-board lawyers into digital asset tech law. The featured speakers at this first of its kind Global Law Symposium were some of the top lawyers in the world on the subject of blockchain and web3 technology. I was truly honored to be a part of this amazing event. 

One of the subjects we covered was how transnational criminal organizations profile and target unsuspecting victims through a sophisticated social engineering fraud practice known as “pig butchering”. Crypto Criminal Defense Lawyer Blog 

The US Department of Justice has unsealed two federal indictments charging a North Korean Foreign Trade Bank representative and three over-the-counter traders for their roles in money laundering schemes using cryptocurrency. Crypto Criminal Defense Lawyer Blog 

      “The charges announced today highlight the ways in which North Korean operatives have innovated their approach to evading sanctions by exploiting the technological features of virtual assets to facilitate payments and profits, and targeting virtual currency companies for theft,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “We will continue to work to disrupt and deter North Korean actors and those who aid them by following the money on the blockchain and shining a light on their conduct.”

  1. Coinbase Files Writ of Mandamus Asking Court to Instruct the SEC to Respond to its Rulemaking Petition Within 7 days
  2. DOJ Charges Defendant's Conspired to Commit Securities Manipulation in Connection with the Sale of the HYDRO ERC-20 Digital Asset Token
  3. Defense in Nate Chastain OpenSea Case Files Motion in Limine To Preclude Use of the Terms "Insider Trading" and "Front Running"
  4. DOJ Seizes Over $112M in Funds Linked to Cryptocurrency Investment Schemes