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On October 21, 2022, the U.S. District Court for the Southern District of New York issued an order dismissing the motion to dismiss the “insider trading” charges filed by a former OpenSea employee, paving the way for the U.S. Department of Justice to proceed with the case. opened. its enforcement action.
as we previously reportedIn June, the Justice Department shocked the irreplaceable token industry by indicting Nathan Chastain on wire fraud and money laundering charges, alleging he broke the law by participating in “cheating.” gave.First-ever Digital Asset Insider Trading Scheme.”
Chastain prosecutionargued that “confidential business information” he allegedly embezzled to profit from the sale of NFTs was not OpenSea’s “property” within the meaning of the Wire Fraud Act. He claimed he could not prove he was involved in money laundering. Transactions on the Ethereum blockchain are publicFinally, Chastain argued that wire fraud charges based on the “embezzlement theory” were insufficient. Because these charges require trading in securities or commodities, and NFTs are neither. press release And at the first meeting of his case.
The court has now dismissed Chastain’s allegations. The court found Chastain’s argument to be “somewhat persuasive,” but concluded that it would be for the jury to decide at trial. reasoned to.
as pointed out beforethe Justice Department did not actually indict him for insider trading as defined in the Securities Act, so the question of whether an NFT is a security is not relevant here. removed the phrase “insider trading” from the court, explaining that it had made another move to prevent the government from using it in court. I pointed out that it was not fully submitted for
As this case continues to develop (DOJ’s Other NFT-related cases), companies, team leaders, DAOs, and anyone else working for Web3 or dealing with NFTs should comply with the NFT Insider Trading Policy ( Open source policy written with Tim Ferriss).
This alert provides general coverage for its area of interest. We provide with the understanding that Frankfurt Kurnit Klein & Selz is not involved in providing legal advice herein and shall not be held liable for damages resulting from errors, inaccuracies or omissions. To do. Our attorneys practice law only in properly authorized jurisdictions. We do not attempt to represent clients in other jurisdictions.
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