Nathaniel Chastain, a former product manager at OpenSea , has filed a lawsuit to dismiss the Justice Department’s insider trading action, according to court documents.
In Monday’s filing, Chastain alleges that the lawsuit against him cannot hold non-performing tokens or NFTs, nor can they be considered securities or commodities. In this case, it cannot face the DOJ’s electronic fake charges.
The motion was filed in the United States for the Southern District of New York.
Joiner wire fraud theory
As noted, Chastain’s legal argument for the dismissal of the expenses is based on the case of Carpenter v. the United States, 484 USA. 19 (1987) – Carpenter’s theory of electronic fraud.
The former OpenSea executive’s legal team takes a basic look at the requirements for insider trading based on Carpenter/United States, highlighting the need to be securities or commodities for a person facing electronic fraud charges.
His lawyers argue that the government’s stance on the issue is “Carpenter’s flawed understanding [theory]. ”
“In any prosecution underneath a Carpenter wire fraud theory of insider trading, the presence of trading in securities or commodities remains a key element of the crime.” reads the motion.
According to Chastain’s legal team, it all boils down to the fact that “the purpose of the Carpenter judgment … is not only to prevent the misuse of confidential information by violating a responsibility owed to the source of that information but also critically to protect financial markets.”
The DOJ indicted Chastain at June, referring to the allegations against him as ‘the first digital asset trading scheme.’ The accusations stated that former OpenSea staff members used insider information to trade NFTs set to be listed on the leading market.
The US Securities and Exchange Commission also just filed charges against a former Coinbase employee and two others for insider trading
