Judge refutes former OpenSea employee’s request to dismiss  fraud case

Key Takeaways:

  • A judge dismissed Nathaniel Chastain’s request to deny the wire fraud charges.
  • The defense’s arguments in its motion to dissolve were “wholly without merit,” the judge claimed.

According to a report, Nathaniel Chastain, a former head of product at OpenSea, a while back asked the court to dismiss the allegations against him, but it was denied. Chastain is charged with wire fraud and insider trading, a crime that derived more than $1.7 million in the cryptocurrency market in 2021.

Jury charged Chastain after it was claimed that the former OpenSea CEO bought and sold non-fungible tokens (NFTs) that he knew would be listed on the marketplace’s home page. According to the DOJ, this was a strategy to make money off of secret information.

CHASTAIN violated the obligations of faith and trust he had to his employer, OpenSea, by using his prior information of the NFTs that would be highlighted on the company’s main page for his own monetary benefit.

Chastain filed a request to repudiate in August, stating that non-fungible tokens are far from being securities or commodities. He also asserted that wire fraud charges based on front-running necessitate trading in such classifications.

In a joint declaration and order, District Judge Jesse Furman refused the motion to dismiss the allegation, declaring that the reasoning was “wholly without merit.”

No court has even implied, much less decided, that a guilty verdict in this kind of case necessitates trading in securities and commodities, according to Furman.

Following a footnote in the viewpoint, Chastain’s proposition contends that the phrase “insider training” may be misleading and that, if it is, removing that section from the accusation would be preferable to denying it entirely.

The Justice Department confirmed Chastain’s arrest on June 15th, 2022. A motion to dismiss the proceeding was submitted by the ex-employee of OpenSea’s defense counsel just two months later. The main contention was  due to the essence of NFTs, the prosecution was premised on “ill-founded applications of criminal law.”

According to the DOJ, Chastain was in charge of choosing which NFTs would be highlighted on OpenSea’s main page. Before their appearance on its homepage, featured NFTs’ identities were kept secret by OpenSea. 

The rate customers were willing to shell out for that NFT, and other NFTs made by the same NFT creator increased after an NFT was spotlighted on OpenSea’s homepage.

Insider trading occurrences in the crypto space have particularly emphasized weak areas in the community that require strict actions. Many such  findings have become increasingly worrisome because insider trading cases are turning out to be more prevalent  in the Web3 sphere

Besides the world’s largest NFT marketplace, Coinbase has also been accused of similar insider trading allegations.

In August, it was discovered that a former product manager for Coinbase had been detained on suspicion of disclosing sensitive information to his brother and friend Sameer Ramani regarding impending announcements of new digital assets that Coinbase users would be able to trade.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

Newsletter

Crypto News, NFTs and Market Updates

Can’t find what you’re looking for? Type below and hit enter!