Nate Chastain, a former executive at OpenSea, has submitted a motion to a U.S. district court in which he asks the court to dismiss the insider trading charges that have been brought against him on the grounds that non-fungible tokens (NFTs) do not fulfill the requirements for charges of wire fraud.

Chastain’s attorney argued, with reference to the Carpenter wire fraud theory, that NFTs were neither securities nor commodities and that insider trading law could not apply to them because the government recognized them as “digital artworks” and issues. In support of this position, the lawyer cited the Carpenter wire fraud theory.

Chastain’s attorney contended in his defense against the claims of money laundering brought against his client that the open and accessible nature of the Ethereum blockchain renders these allegations groundless. It is possible to get access, for the sake of further inquiry, to the NFT transactions that the accused carried out.

As a consequence of the allegations of insider trading, Chastain was fired from his position at OpenSea, and he now faces judicial proceedings that, if he is proved guilty, may result in a term of twenty years in prison.

The United States Department of Justice (DOJ) placed Chastain in custody in June on allegations that he used insider knowledge obtained from OpenSea’s NFT collection to trade dozens of NFTs that were listed on the homepage of the website.

The arrest of Chastain on charges of engaging in insider trading was the first of its sort to occur in the cryptocurrency industry. Since then, several persons, including the former manager of Coinbase, Ishan Wahi, have been charged with criminal offenses.

It is claimed that Ishan divulged information to friends and relatives regarding assets that were about to be published on Coinbase. These individuals then utilized wallets based on Ethereum to purchase the cryptocurrency assets and then sold them once the listing was completed.

It is believed that the accused brought in a profit of around $1.5 million as a result of the illegal conduct.

Ishan, in much the same way as Chastain did, attempted to defend himself by arguing that the rules of the United States governing insider trading do not apply to cryptocurrencies.

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