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NEW YORK: Jurors began deliberating on Monday in the trial of a former product manager at OpenSea, the world’s largest marketplace for non-fungible tokens (NFTs), for allegedly making trading decisions based on the tokens he featured on the company’s homepage.
Federal prosecutors in Manhattan last year charged Nathaniel Chastain with netting more than US$50,000 in illegal profits by buying NFTs shortly before he decided to showcase them on OpenSea’s website, and then selling them once the assets rose in value shortly afterwards.
“He knew that when he came up with a plan for what to feature on OpenSea’s website, he was supposed to use that for the company, not for his own gain,” prosecutor Thomas Burnett said in his closing argument on Monday. “His greed won out.”
It was the first in a series of high-profile cases related to digital assets launched by the US Attorney’s office in Manhattan last year, which called the charges against Chastain the first insider trading case involving digital assets.
The case could have broader implications for assets that do not fit into existing regulations preventing investment advisers, brokers and others from trading on material nonpublic information, legal experts have said.
Daniel Filor, a lawyer for Chastain, said the case was not about whether jurors found Chastain’s trades “a little sketchy” but about whether he intended to defraud OpenSea. He said the trades did not break the company’s rules.
“Nate’s choices in his head about which NFT to feature weren’t considered by OpenSea to be confidential,” Filor told the jury.
Chastain was asked to resign in September 2021, after OpenSea found out about his trades. He was charged in June 2022 with one count of wire fraud and one count of money laundering.
Burnett said Chastain used anonymous accounts to trade the NFTs, which showed he knew what he was doing was wrong.
“If the defendant thought there was no problem using inside information to buy NFTs, he could have just used regular accounts,” he said. “He did that to throw people off his scent.”
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