Indictment dismissal filed by legal representatives of Nathaniel Chastain, who was a former staff of Non-fungible token (NFT) marketplace OpenSea has been rejected by the court. Presiding judge Jesse Furman of the Southern District of New York dismissed the filing on the basis that his argument is wholly without merit.”
Nathaniel Chastain who was the former head of product at the global NFT marketplace was indicted sometime in June for his participation in insider trading. Specifically, it was discovered that Chastain was accruing gains by purchasing OpenSea’s NFTs at relatively low prices.
Leveraging his role in the firm at that time, he was privy to core confidential information about these NFTs which were about to be listed on the homepage of the OpenSea platform. Consequently, he was charged with one count of wire fraud and one count of money laundering. Each of these counts carried a maximum sentence of 20 years.
OpenSea Defendants Say NFTs are Not Securities
In the few weeks which followed his indictment, Chastain’s lawyers submitted a filing to the court arguing that the decision made by the government was rather unprecedented in comparison with the past.
They also noted that the case was not charged under the appropriate section not taking cognizance of “well-established precepts of the wire fraud statute’ and ‘decades of jurisprudence outlining the boundaries of the misappropriation theory of insider trading.”
“while seeking to use this first-of-its-kind prosecution to posit broad assertions of insider trading, property theft, and money laundering, the government’s arguments are contrary to years of settled precedent and are a transparent effort to plant a flag in the blockchain industry,” Chastain’s legal party outlined
NFTs do not constitute securities not commodities, they said. In addition to the previous filing, the lawyers filed a motion to ask that the court erase the term ‘insider trading’ and also restrict the government from referring to the term in the future. Additionally, a motion to subpoena OpenSea and destroy evidence retrieved from his home was filed.
Instead, Judge Furman dismissed the argument and his statement stated “No court has suggested, let alone held, that conviction in such a case requires trading in securities and commodities.”
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