Ian McGinley Quoted on Crypto Insider Trading Case

Akin Gump white collar defense and government investigations partner Ian McGinley was quoted in the article “The case against Nate Chastain shows how authorities could pursue ‘insider trading’ in crypto,” published by The Block, a digital asset-focused periodical.

The article discusses a grand jury indictment handed down last week against former OpenSea head of product Nate Chastain in what could be considered the first insider trading case in cryptocurrency. The Block notes that Department of Justice (DOJ) authorities believe that what Chastain did was illegal. However, because NFTs are not currently considered securities, and Chastain’s alleged activities did not take place on a regulated platform, it writes, it would be difficult to make the case that he violated securities laws. As a result, DOJ is going after Chastain on wire fraud and money laundering charges. The article notes that the tack DOJ is taking possibly sheds light on how the government will go after crypto insider trading, a new type of fraud, according to The Block, that doesn’t fit neatly into extant law.

McGinley, former Co-Chief of the Complex Frauds and Cybercrime Unit at the U.S. Attorney’s Office for the Southern District of New York, said that the case positions OpenSea as the victim, and the government claims that Chastain’s crime is alleged violation of OpenSea’s policies by misappropriating private information for his personal gain.

McGinley said that, had OpenSea not had these policies and procedures in place, it would be much harder to bring these charges.

He also noted that, were a court to find this type of case theory holds water, it is likely that the government will use it in future enforcement actions aimed at crypto market participants: “If the government is successful here, I think you're going to see more wire fraud prosecutions for insider trading. And not just NFT exchanges, but cryptocurrency exchanges where there have also been reports of people kind of front running.”