Ex-OpenSea employee wants first NFT insider trading case tossed

The brand of non-fungible token (NFT) market OpenSea is seen by a magnifying glass amid NFT objects displayed on its web site, on this illustration image taken February 28, 2022. REUTERS/Florence Lo

(Reuters) – A former employee at non-fungible token market OpenSea has requested a federal choose in New York to dismiss prices that he engaged in insider trading, saying prosecutors stretched the legislation to “plant a flag within the blockchain business.”

Former OpenSea product supervisor Nathaniel Chastain was charged in June with wire fraud and cash laundering over allegations that he secretly purchased NFTs he had chosen for OpenSea’s dwelling web page, and bought the tokens at a revenue as soon as that they had been featured. The case was the first to allege insider trading in digital belongings. Chastain has pleaded not responsible.

In a movement to dismiss the case on Friday, Chastain argued prosecutors’ concept that he misappropriated his personal concepts about what ought to go on the homepage would “criminalize run-of-the-mill civil employment disputes.”

“The authorities would have this court docket consider that if an employee is at work, has a thought, after which acts in accordance with that thought, then the employee’s thought—in and of itself—is the property of his employer,” his attorneys wrote .

A spokesperson for the US legal professional’s workplace declined to remark.

The wire fraud statute outlaws schemes to acquire property, and the US Supreme Court has more and more restricted what falls in that class, Chastain stated. He argued that the “ethereal” and “commercially worthless” determination to focus on a particular NFT is just not property.

The case raises one other novel authorized query: whether or not insider trading in objects apart from securities or commodities is a criminal offense.

Chastain argued that it isn’t, saying the legislation prohibits insider trading to guard the monetary markets, to not preserve firms’ info non-public.

“Absent any connection to the monetary markets, insider trading, in any type or context, can’t exist,” he stated.

The case is US v. Chastain, US District Court, Southern District of New York, No. 22-cr-00305.

For the federal government: Thomas Burnett and Nicolas Roos.

For Chastain: David Miller, Gregory Kehoe and Charles Berk of Greenberg Traurig.

Read extra:

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