SNEAK PEEK
- OpenSea insider trading case might end with NFTs labeled as securities.
- OpenSea insider trading case might end with NFTs labeled as securities.
- On Wednesday, prosecutors in Manhattan charged former OpenSea product manager with insider trading.
According to Alma Angotti, Former Securities and Exchange Commission lawyer, charge and arrest of Nathaniel Chastain, OpenSea’s executive with insider trading might label the NFTs as securities.
Wire fraud and money laundering in association with a scheme to commit insider charging have been concluded as the real charges, as said by The U.S. Attorney’s Office for the Southern District of New York. ‘Insider trading’ is a phrase that has never been used in regard to cryptocurrency and signals to insider trading of securities.
According to the government, the phrase is reserved for the trading of company stocks or other securities by people having access to details of the business they work for. Whether this is insider trading or an effort to brand NFTs as securities is the new question.
In her statement, Angotti said:
It could very well be a security under the Howey Test — if you’re buying a piece of an NFT and hoping the price will go up so you make money from it, that’s not very different [from securities].
Nathaniel Chastain used anonymous hot wallets and accounts on OpenSea to buy 45 NFTs that were known to him would be featured on the home page. Once they got featured and their value rose, he sold them at higher prices.
Angotti said that there was nothing surprising about the charges. She further said:
Misappropriating your employer’s confidential information is fraud, and once you move the proceeds of that fraud through the monetary system, it’s money laundering.
In the press release, Damian Williams, the U.S. attorney for the Southern District of New York, said:
NFTs might be new, but this type of criminal scheme is not. As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself. Today’s charges demonstrate the commitment of this Office to stamping out insider trading — whether it occurs on the stock market or the blockchain.
