- Chastain’s lawyers have claimed that the authorities have filed prices to set legal precedent that NFTs are securities.
- According to the lawyers, the NFTs at issue are not securities or commodities and weren’t legally considered OpenSea’s property.
- The case might label NFTs as securities.
Lawyers of OpenSea‘s former product manager, Nathaniel Chastain, have said that the authorities of the United States have filed charges only in an attempt to set a legal precedent that NFTs are securities.
In June, Today NFT News reported that the former OpenSea employee was charged for committing insider trading in NFTs.
Chastain’s legal team has filed a motion that states dismissing the allegations of wire fraud and money laundering in connection to an NFT insider trading scheme. According to the lawyers, the charges were invalid to an extent as the NFTs at issue are not commodities and securities. Moreover, the tokens were not the property of the platform legally.
Chastain’s legal team said:
The government has brought the instant prosecution using ill-founded applications of criminal law to set precedent in the digital asset space.
To utilize the unique prosecution with an aim to put forward broad assertions of insider trading, money laundering and property theft, the arguments made by the government are contradictory compared to the years of settled precedent. Also, they are simply an attempt to incorporate a flag throughout the blockchain industry.
In June, Chastain was accused of insider trading and was blamed for misusing his position as well as insider details to buy 45 NFTs way before they were displayed on the website of OpenSea. Anonymous hot wallets and accounts were used to sell the NFTs to make profits. The allegations were confirmed to some extent by Devin Finzer, co-founder and CEO of OpenSea.
In June, former SEC Lawyer Alma Angotti said that the case might label NFTs as securities. In the United States, Chastain is among the first individuals who have been accused in a case of insider trading of NFTs.
If the legal team of Chastain agrees with prosecutors or does not win the case, the SEC can implement its regulatory and enforcement powers on some cryptocurrencies. An identical move was made by the SEC when it mentioned nine crypto assets as securities in an insider trading case against Ishan Wahi, former product manager at Coinbase. Reportedly, he and two others were charged in an insider trading case.