Judge denies former OpenSea employee's motion to dismiss fraud case

Quick Take

  • A judge has denied a motion to dismiss the wire fraud charges against former OpenSea employee Nathaniel Chastain.
  • The judge called the defense’s argument in its motion to dismiss “wholly without merit.”

A judge in the Southern District of New York has denied a motion to dismiss the wire fraud charges against former OpenSea employee Nathaniel Chastain.

A grand jury indicted Chastain after the former OpenSea head of product allegedly purchased and sold non-fungible tokens (NFTs) he knew would be listed on the marketplace's homepage – a scheme the DOJ alleges was akin to turning a profit using insider information.

Chastain filed a motion to dismiss in August, arguing NFTs constitute neither securities nor commodities and that wire fraud charges alleging front-running require trading in those categories. 

District Judge Jesse Furman formally disagreed in a memorandum and order today, denying the motion to dismiss the indictment and saying the argument "is wholly without merit." 

"No court has suggested, let alone held, that conviction in such a case requires trading in securities and commodities," Furman wrote.

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A footnote within the opinion says that, at most, Chastain's argument suggests the term "insider trading" may be misleading and if so, the appropriate action would be to strike the phrase from the indictment rather than dismissing the indictment altogether.

Chastain's legal team filed a separate motion earlier this month requesting the court strike the term from the case and bar the government from using it in the future. The defense team also filed to subpoena Chastain's former employer and throw out evidence related to a search of his home. 

The next conference in the case is scheduled for Oct. 27 at 11 a.m. in New York.


© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Aislinn Keely is a reporter on The Block's policy team holding down the legal beat. She covers court decisions, bankruptcies, regulatory actions and other key moments in the legal sphere, putting them in context for the wider crypto industry. Before The Block, she lent her voice to the NPR affiliate WFUV and helmed Fordham University's student newspaper. Send tips or thoughts on all things policy and legal to [email protected] or follow her on Twitter for updates @AislinnKeely.