The New York District Court held its first hearing in the case against former OpenSea Director Nate Chastain on April 24.
The allegations against Nate Chastain, who was accused of committing fraud in the NFT trade with inside information, were filed by the US Manhattan Attorney’s Office on May 31, 2022. In this context, Chastain is charged with two different crimes: phone fraud and money laundering.
Moustakis: Could Set a Precedent
The report, prepared by the US Manhattan Attorney’s Office, cites various examples of abuse, such as the NFT The Brawl 2 case.
The report claims that Chastain bought NFTs purchased through anonymous accounts minutes before they were available for sale on OpenSea, and sold 100 percent on the card within a few hours.
Chastain’s advocates petitioned in October 2022 to be cleared of insider trading charges, but the attempt was unsuccessful. At the time, Chastain said it was provocative to use the term insider trading to describe the alleged charges. Chastain argued that this statement applies only to securities.
The outcome of the trial could have a major impact on the legal classification of NFTs, as the term insider trading was not used in relation to cryptocurrencies or NFTs prior to Chastain’s accusations.
“If this lawsuit continues, it will set a precedent that insider trading theory can be applied to any asset class,” former SEC employee Philip Moustakis told Reuters.
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