Prosecutors want to claim NFTs as securities, alleges legal team of former OpenSea employee

Legal professionals representing Nathaniel Chastain, the previous OpenSea product supervisor accused of insider buying and selling, have claimed United States authorities solely filed costs in an try to set a authorized precedent that nonfungible tokens (NFTs) are securities.

In a Friday submitting with the Southern District of New York court docket, Chastain’s authorized crew from Greenberg Traurig filed a movement to dismiss the indictment towards him, which included allegations of wire fraud and cash laundering associated to an NFT insider buying and selling scheme from June to September 2021. The attorneys argued that the fees towards the previous OpenSea worker have been invalid partially “as a result of the NFTs at concern are neither securities nor commodities” and the tokens weren’t legally thought-about the platform’s property.

“The federal government has introduced the moment prosecution utilizing ill-founded purposes of felony legislation to set precedent within the digital asset area,” mentioned Chastain’s authorized crew. “Whereas looking for to make use of this first-of-its-kind prosecution to posit broad assertions of insider buying and selling, property theft and cash laundering, the federal government’s arguments are opposite to years of settled precedent and are a clear effort to plant a flag within the blockchain trade.”

Prosecutors charged Chastain with insider buying and selling in June, alleging he had used his place and insider data at OpenSea to buy 45 NFTs earlier than they have been scheduled to be featured on {the marketplace}’s web site. He allegedly used nameless sizzling wallets and accounts, later promoting the NFTs for a revenue. Not writing about Chastain by title, OpenSea co-founder and CEO Devin Finzer confirmed a number of the allegations in a September 2021 weblog publish, noting the worker had resigned.

Cointelegraph reported in June that former Securities and Alternate Fee lawyer Alma Angotti mentioned the case might open the doorways to NFTs being labeled as securities. Chastain was one of many first people to be charged in the USA in a case associated to the insider buying and selling of NFTs within the crypto area.

Associated: SEC investigating NFT market over potential securities violations: Reviews

Ought to Chastain’s authorized crew attain an settlement with prosecutors or lose the case, it might embolden the SEC to broaden its regulatory and enforcement powers over sure cryptocurrencies. The SEC made an identical transfer to label 9 crypto belongings as securities in an insider buying and selling case towards former Coinbase product supervisor Ishan Wahi, his brother and an affiliate.

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