Ex-OpenSea Exec Argues NFTs Are Not Securities to Dismiss Insider Trading Charges
The former product manager was in June charged with wire fraud and money laundering. His legal team is now trying to dismiss the case.
Lawyers for former OpenSea product manager Nate Chastain have filed a motion to dismiss the insider trading charges against the ousted NFT marketplace employee. Filed Friday, the motion argues that NFTs are not securities or commodities—so no insider trading could have taken place.
The Department of Justice and FBI in June arrested and charged Chastain with wire fraud and money laundering for alleged trades he made using insider knowledge of which NFT collections were going to be featured on OpenSea.
OpenSea is the world’s largest marketplace for NFTs, or non-fungible tokens—unique digital tokens linked to content, such as art or music, providing proof of ownership.
Friday’s filing says: “As alleged, acting with purported criminal intent, Mr. Chastain exploited his advance knowledge of which NFTs would be featured on OpenSea’s homepage by purchasing certain NFTs before they were featured and selling them at a profit after they were featured.
“The rub, however, is that the NFTs are neither securities nor commodities.”
Chastain’s case was the first ever digital asset insider trading scheme, according to the DOJ. Insider trading is using confidential information to one’s benefit in order to make lucrative trades.
Chastain allegedly used information only an employee would have in order to know which NFTs would be listed so he could sell them for “two- to five-times his initial purchase price,” according to the charges.
He also used anonymous accounts and crypto wallets to conceal the transactions, investigators claimed.
Each of the charges against Chastain carries a maximum sentence of 20 years in prison.
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