Image source: Cryptonary
Former OpenSea chief product officer Nate Chastain tried to persuade a judge to dismiss the charges against him.
Chastain was charged with wire fraud and money laundering.
Chastain failed to convince the judge despite his efforts.
His trial will continue accordingly.
Indictment
According to the government, Nate Chastain illegally profited from NFT sales last year.
He was responsible for deciding which NFT should appear on the OpenSea homepage.
The indictment used his authority and knowledge to allege that Chastain purchased certain NFTs before their introduction.
It was also said that he flipped them for profit once their value had increased.
According to prosecutors, Chastain set up wallet addresses to store NFTs.
He would then hand over the profits to himself.
Nate Chastain
In September, OpenSea parted ways with Chastain when they learned about the investigation.
The company also enlisted the help of a third party to review the incident and make recommendations to strengthen its existing protocols.
Nate Chastain asked that the charges be dismissed.
He made several arguments but could not influence the judge in the case.
According to Chastain, the information he allegedly withheld was not property within the statute’s meaning.
He also argued that he had not committed wire fraud, saying that if he did, it would require “the existence of trading in securities or commodities.”
Securities and commodities don’t cover NFTs.
The former OpenSea employee asked that the charges be dismissed.
The judge
On money laundering, Nate Chastain said the government was trying to “criminalize the mere movement of money.”
He also claims that they failed to prove the money laundering allegations’ deception and financial transaction elements.
When the judge denied the request, they referred it to another court case.
A Wall Street Journal reporter formed a scheme with traders in the referred case.
The reporter gave traders clues about the content and timing of articles before publishing them and shared the resulting profits.
The document reads:
“The columnist and traders were charged with, and convicted of, both securities fraud and mail and wire fraud.”
“So, not ‘insider training’ as conventionally understood, but definitely ‘wire fraud.'”
The judge admitted that the term “insider trading” can be misleading.
However, he said the appropriate response would be to remove the phrase from the indictment.
Furthermore, it would prevent the government from using the term for the trial.
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