US Judge Rejects Motion to Dismiss Fraud Case Made by Former OpenSea Employee

Nathaniel Chastain, former Head of Product at OpenSea has been denied the motion to dismiss the wire fraud case leveled against him by a Southern District Court in New York as reported by The Block.


In a memorandum and order published in the week, District Judge Jesse Furman expressed his formal disagreement, denying the motion to dismiss the indictment, stating that the argument “is without substance.”


Chastain was indicted in May by a grand jury for allegedly misappropriating OpenSea’s business information under count one charge as regards which Non-Fungible Tokens (NFT) are going to be featured thus using the information to buy NFTs before they are featured on the company’s homepage.


The indictment claims that Chastain engaged in “insider trading” of NFTs from approximately June 2021 until approximately September 2021. More precisely, Chastain is accused of stealing from OpenSea, his employer, by using the company’s trade secrets.


Chastain’s Attorney stated in his filing to dismiss the case that NFTs are neither commodities nor securities and therefore Insider trading cannot arise in any way or circumstance if there is no connection to the financial markets.


He also highlighted that the necessary bitcoin movements from one personal digital wallet to another personal digital wallet do not and cannot be claimed by the government to constitute a “financial transaction” under the money laundering legislation. The indictment must therefore be dismissed due to the reasons stated above.


OpenSea in the Face of On-going Challenges


OpenSea has continued to thrive and develop its processes in spite of challenges that are being faced in the digital ecosystem.


In August, OpenSea, the largest marketplace in the world for trading NFT goods, made public its new rules dictating how stolen digital artwork and other types of theft are handled on its platform.


Opensea has recently introduced new functionality in its platform that allows users to bulk list and buy up to 30 products at once from the same chain in a cart before paying for them all in one transaction in a recent report.

Image source: Shutterstock


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OpenSea Introduces New NFT Theft Policy

OpenSea, the world’s biggest venue for trading Non-Fungible Token (NFT) items, has revealed its new policy governing the handling of stolen digital arts and general theft on its platform. 


According to OpenSea, some of the users who bear the most brunt in the digital collectable world are those who buy stolen NFTs but have no fault whatsoever in the transactions. With its new policy, the trading platform said that some of the challenges it has been facing with respect to handling stolen NFTs can now be resolved.

OpenSea said its previous allowance to apply police reports only on escalated reports on stolen NFTs will no longer be the case, but rather, the police reports will be treated equally for all reports of NFT thefts respectively.

“Based on your input, we’ve already called to adjust elements of how we implement our policy. 1st, we’re expanding the ways we use police reports: we’ve always used them for escalated disputes, but they’ll now be used to confirm all theft reports,” the NFT marketplace said, adding that;

“For all reports going forward, if we don’t receive a police report within 7 days, we’ll re-enable buying & selling for the reported item. This change will help prevent false reports. We think this is a good 1st step & we’re grateful for the community’s suggestions.”

While hacking and funds looting is commonplace in the broader Web3.0 world, with some of the most concerning cases this year being the loot on Ronin Bridge and Nomad, NFTs are also incessantly being looted in several ways. OpenSea, the largest digital collectable trading platform presents a very good avenue for cyber criminals to discharge their stolen items.

To provide cross-bound protection for all of its users, OpenSea said it will enable NFTs reported as stolen to be resold 7 days after if police reports are not submitted to back up the claims. OpenSea also said it will reduce the process by which users who list an item as stolen can retract their claim and list the items for sales when recovered without needing a notary.

Image source: Shutterstock


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