Attorneys representing Nathaniel Chastain, the previous OpenSea product supervisor accused of insider buying and selling, have claimed United States authorities solely filed fees in an try and set authorized precedent that nonfungible tokens (NFTsare securities.

In a Friday submitting with the Southern District of New York courtroom, Chastain’s authorized staff from Greenberg Traurig filed a movement to dismiss the indictment towards him, which included allegations of wire fraud and cash laundering associated to an NFT insider buying and selling scheme from June to September 2021. The attorneys argued that the costs towards the previous OpenSea worker had been invalid partly “as a result of the NFTs at problem are neither securities nor commodities” and the tokens weren’t legally thought of the platform’s property.

“The federal government has introduced the moment prosecution utilizing ill-founded functions of prison regulation to set precedent within the digital asset area,” mentioned Chastain’s authorized staff. “Whereas looking for to make use of this first-of-its-kind prosecution to posit broad assertions of insider buying and selling, property theft and cash laundering, the federal government’s arguments are opposite to years of settled precedent and are a clear effort to plant a flag within the blockchain trade.”

Prosecutors charged Chastain with insider buying and selling in June, alleging he had used his place and insider data at OpenSea to buy 45 NFTs earlier than they had been scheduled to be featured on {the marketplace}’s web site. He allegedly used nameless scorching wallets and accounts, later promoting the NFTs for a revenue. Not writing about Chastain by title, OpenSea co-founder and CEO Devin Finzer confirmed a few of the allegations in a September 2021 weblog submit, noting the worker had resigned.

Cointelegraph reported in June that former Securities and Change Fee lawyer Alma Angotti mentioned the case might open the doorways to NFTs being labeled as securities. Chastain was one of many first people to be charged within the United State in a case associated to insider buying and selling of NFTs within the crypto area.

SEC investigating NFT market over potential securities violations: Experiences

Ought to Chastain’s authorized staff attain an settlement with prosecutors or lose the case, it might embolden the SEC to develop its regulatory and enforcement powers over sure cryptocurrencies. The SEC made the same transfer to label 9 crypto property as securities in an insider buying and selling case towards former Coinbase product supervisor Ishan Wahi, his brother and an affiliate.