The trial of former OpenSea product manager Nathaniel Chastain, who is being accused of insider trading with non-fungible tokens (NFTs), began with its first jury hearing in the Southern District Court of New York on April 24. The United States Manhattan Attorney’s Office filed the allegations against Chastain on May 31, 2022, which include two counts of wire fraud and money laundering. Chastain allegedly used his insider knowledge to secretly buy 45 NFTs shortly before their listing, in order to sell them immediately afterward for a profit. The trial is expected to last several weeks and may have a significant impact on the legal classification of NFTs.
The case might see NFTs labeled as securities, according to former U.S. Securities and Exchange Commission lawyer Alma Angotti. If the insider trading theory sticks, it could be applied to any asset class, says former SEC employee Philip Moustakis. In a separate court case, crypto exchange Coinbase argued that the SEC had no jurisdiction to file a lawsuit in an insider trading case against the brother of the platform’s former product manager.
