One of the most intriguing stories to have come out of the NFT space this year was that of Nathaniel Chastain, who is a former employee of OpenSea. Last year, Chastain was fired from his position and is currently being charged with insider trading.
While working at OpenSea, Chastian used his insider knowledge about what assets and collections would be featured on the OpenSea homepage to make a profit for himself. His case has marked the first time that someone is being charged for insider trading with regards to NFTs. Now, Chastain is hitting back, at both the FBI and his former employer.
Chastain Makes His Case
In recent court filings, Chastian is looking to have the term of insider trading dropped from his case. He has states that the use of this term to describe his actions as “inflammatory” and “unduly prejudicial”. The argument that his legal team is making is that insider trading only applies to assets that are recognized as securities by regulatory bodies. NFTs and other blockchain-based assets operate in a bit of a regulatory grey area and his team is looking to have his case thrown out on these grounds. His team has also claimed that the regulatory bodies involved in this case, namely the SEC and FBI, are trying to use it to their own benefit.
“The term’s presence in the Indictment—and any reference to it at a trial—serves no legitimate prosecutorial purpose and is simply a means for the government to increase media attention and inflame the jury in this first-of-its-kind case in the digital asset space,” recent documents said.
Besides the legal back-and-forth about the accuracy of the term ‘insider trading’, Chastain’s lawyers are also trying to subpoena OpenSea itself. One of the arguments against Chastain is that not only did he act unethically in his role but he cost the platform money because of his actions.
But Chastain denies all of this and claims that OpenSea did not suffer any financial damage because of him. To prove this, his team wants access to OpenSea’s internal and external communications. This includes Slack messages, emails, and communication with government bodies that would have referenced him in any way.
As for the FBI, Chastain says that he suffered an illegal interrogation at their hands in 2022. In September of that year, the FBI conducted a raid on his home and he says that his electronic devices were accessed without his consent and that he was subject to an illegal interrogation.
As a result, his team wants all the statements he made during the interrogation and all the information collected from his devices to be ruled inadmissible.
The Case of the Year?
Regardless of the outcome, this case is already a landmark one, as it has opened the floodgates for insider trading investigations when it comes to digital assets. Whether what Chastain did can be considered insider trading and whether or not his statements are admissible, it is certainly gearing up to be one of the most interesting this year.