Ex-OpenSea’s Staff Nathaniel Chastain Files For Indictment Dismissal

August 23, 2022

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Legal representatives of Nathaniel Chastain, who was a former OpenSea staff and the Head of Products at the American online non-fungible token (NFT) marketplace have filed for the dismissal of the indictment against him.

According to the memorandum in support of the motion, the lawyers argued that the government’s decision to prosecute Nathaniel is totally unprecedented compared to the past.

In their argument, the lawyers said that “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”.

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The lawyers also mentioned that the case was not charged under the appropriate section as the government refused to take note of the ‘well-established precepts of the wire fraud statute’ and ‘decades of jurisprudence outlining the boundaries of the misappropriation theory of insider trading.’

Likewise, Nathaniel’s lawyers have said that NFTs are neither securities nor commodities, and such wire frauds are filed for categorized securities and commodities. The lawyers have requested that the indictment be dismissed.

OpenSea Former Head of Product Charged in First-Ever NFT Insider Trading Case

A few months ago, 31 years old Nathaniel Chastain was arrested by the Southern District of New York. He was charged with perpetrating an insider trade in NFTs on two counts, one for wire fraud and the other for money laundering. Based on the allegations levied against him, Nathaniel hijacked private information about the NFTs that were going live on OpenSea’s homepage and used them for his profit.

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Initially, he was placed in charge of NFT selections for the OpenSea homepage. It was through this route that he was able to buy the NFTs before they were featured in the online marketplace. Trying to obfuscate his scheme, he claimed to have sold every one of those NFTs as soon as they hit the main page. His profit margin was about two to five times the initial purchase price of the tokens.

The New York Department of Justice regarded this as the first of its kind as it concerns insider trading with digital assets. The Justice Department announced that each of these counts carries a maximum sentence of twenty years.