A trial date is now set for OpenSea’s former head of product Nathaniel Chastain, who will face charges on April 24, show court documents.
When the case goes to trial, Chastain will face charges of wire fraud and money laundering.
In a memo filed yesterday, U.S. District Judge Jesse M. Furman denied a number of motions filed by both sides in the case and said, “Chastain’s arguments about use of the term 'insider trading' are moot."
The DOJ has called the case against Chastain the first insider trading scheme involving digital assets. However, a question of precedent in terms of insider trading remains as the assets in question are neither defined as securities nor commodities, Chastain's lawyers have argued.
Charges were first brought against Chastain in October 2022 when he was indicted in connection with alleged illegal profit from NFT sales in 2021. Prosecutors said Chastain used inside knowledge of which NFTs would appear on the front page of OpenSea to buy NFTs ahead of being featured and sell them for a profit once highlighted on the site.
The judge did grant the government’s motion to preclude witness opinions on the case. A second motion was also granted to preclude arguments that OpenSea suffered no harm, with the caveats that expert testimony “may open the door to evidence about the effects (or lack thereof) of Chastain’s conduct,” Furman wrote in the memo.
The court could also wind up hearing from Chastain directly on how he thinks his actions impacted his former employer. The judge wrote that Chastain may elect to testify on “his beliefs regarding the effects of his conduct on OpenSea on the theory that such testimony would be probative of willfulness and intent.”
Furman also ruled that “Chastain may be entitled to cross-examine these witnesses about the clarity of the agreement (or lack thereof),” and that the court may rule on the matter at trial.
Meanwhile, in another case of digital asset insider trading, former Coinbase product manager Ishan Wahi pleaded guilty to two counts of conspiracy to commit wire fraud in February. Wahi's attorneys made a similar argument and tried to have the Securities and Exchange Commission's case dismissed on the grounds that there's still no regulatory clarity that the tokens he traded are securities.
Prosecutors filed charges against Wahi, his brother Nikkhil, and another, Sameer Ramani, as the SEC simultaneously brought civil charges against the trio for allegedly violating securities laws.