United States prosecutors have opposed a motion by a former employee of non-fungible token (NFT) marketplace OpenSea to remove “insider trading” references from his charges.
Prosecutors said the phrase accurately describes the crimes former OpenSea product manager Nathaniel Chastain is charged with in a memo filed Oct. 14. It was responding to a motion by Chastain to stop referring to the phrase on Oct. 3, according to Law360.
Chastain was indicted in June for allegedly buying 45 NFTs from June to September 2021 through anonymous wallets and selling them for profit. He allegedly used his OpenSea post to choose or know which collections appeared on the home page, which often increased their value.
Chastain argued that the use of “insider trading” to describe his alleged actions is “incendiary” and has nothing to do with the charges he faces, adding that a jury may be influenced by the term if his case goes to trial. .
He also added that “insider trading” only applies to securities and not NFTs, a claim similarly made in August by his legal team, and the phrase was used to draw attention in the media to skew the jury’s opinion of him.
Prosecutors responded, stating that the phrase “accurately captures” the accusations made against him and the term is not “so inherently inflammatory” as to justify the “extreme measure” of removing the term from his charges.
They also criticized his insider trading claim that it only applies to securities, calling it a “legal error” and an “unduly narrow understanding of the phrase,” claiming it can be used to refer to multiple types of fraud in which someone without public knowledge uses it. to trade assets.
Related: Brother of Former Coinbase Employee Pleads Guilty to Insider Trading Charges: Report
The term “insider trading” had not previously been used in reference to cryptocurrencies or NFTs prior to Chastain’s charges.
In June, shortly after Chastain was indicted, former U.S. Securities and Exchange Commission (SEC) attorney Alma Angotti said the case could lead to NFTs being labeled as values, since they could be considered one under Howey’s test.
The Howey test is used to determine whether a transaction is an “investment contract” that exists when there is the “investment of money in a joint venture with a reasonable expectation of profit from the efforts of others,” according to the SEC. .
This post Prosecutors argue “insider trading” claim in OpenSea case is accurate
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