| Chastain
Guilty of Insider Trading OpenSea NFTs So
Sentencing August 22 in SDNY
By Matthew
Russell Lee, Patreon Maxwell
Book
SDNY COURTHOUSE,
May 3 – Already there are
several civil Non-Fungible
Token cases in the U.S.
District Court for the
Southern District of New York.
On June 1, 2022 a
criminal case was unsealed,
charging NATHANIEL CHASTAIN, a
former product manager at
Ozone Networks, Inc. d/b/a
OpenSea (“OpenSea”), with wire
fraud and money laundering in
connection with a scheme to
commit insider trading in
Non-Fungible Tokens, or
“NFTs,” by using confidential
information about what NFTs
were going to be featured on
OpenSea’s homepage for his
personal financial gain."
Inner City
Press covered the trial
(below) until, on May 2, 2023,
Chastain was found guilty and
his sentencing set for August
22. Inner City Press was in
the courtroom as his attorneys
hugged him.
Afterward,
US Attorney Damian Williams
said in a statement,
"Nathaniel Chastain exploited
his advanced knowledge of
which NFTs would be featured
on OpenSea’s website to make
profitable trades for
himself. Although this
case involved trades in novel
crypto assets, there was
nothing particularly
innovative about his conduct —
it was fraud. A jury has
found that Chastain is guilty
of using inside information
for his own personal gain, and
he now faces time in federal
prison." Sam Bankman-Fried is
still out on bail - and
violating his conditions - on
consent.
Back
when Chastain
was presented,
before U.S.
District Court
for the
Southern
District of
New York
Magistrate
Judge Barbara
C. Moses,
Chastain was
allowed to
leave after
signing a
$100,000 bond.
He can travel
throughout the
continental
US, but
urinanalysis
was ordered to
test for
drugs.
On June 15, 2022
Chastain was arraigned before
Judge Jesse M. Furman.
Discovery includes three
phones; there was no post
arrest statement. But
Chastain's lawyer took the
opportunity to ask how it
could be insider trader if
NFTs are neither securities
nor commodities.
On April
17, 2023, Chastain filed an
argument in opposition to the
US' motions in limine, that he
should be able try to convince
the jury "that this
prosecution is novel and
unprecedented," citing a 1984
Second Circuit case, US v.
Rosado, about Puerto Rican
independentistas.
On April 24,
there was jury selection.
Inner City Press went. There
was a Bronxite who works at
Chipotle and a special
education math teacher from
Rockland County. Then as Juror
18, a man who said he couldn't
hear what Judge Furman said.
He was excused, with the
room's acoustics cited - and
replaced by an entrepreneur
who said he has bought crypto
and NFTs and remembers hearing
of the case when it was
indicted, and also of Judge
Furman.
On April 25, the
US filed a letter seeking to
bar testimony by Chastain's
expert Professor Skinner about
an alleged lack of loss to
OpenSea, arguing that is not
an element of the crime
charged. In the alternative,
the US asks for a Daubert
hearing.
On April 26, a
government expert was on the
stand testifying about the IP
addresses of Chastain's
wallets and his profits from
NFTs, three times his monthly
$11,000 OpenSea salary.
On May 2 the jury
was deliberating when, just
before 5 pm, they sent out a
note: "Re Count One, Element
One. If the defendant viewed
the information as
confidential, but Devin
Finzer, the other signatory of
the Confidentiality Agreement
did not, is that enough
consider it confidential?"
Chastain
"believe[s] the jury be
instructed that the answer is
'no.'" Watch this site.
More on Substack
here
Inner City Press
will continue to cover these
cases.
The case is US v.
Chastain, 22-cr-305 (Furman /
Moses)
***
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