Has Pandora's box been opened? Former United States Securities and Exchange Commission lawyer Alma Angotti says this week's news about an OpenSea employee being charged with insider trading could open the doors to NFTs being labeled as securities.
“It could very well be a security under the Howey Test — if you’re buying a piece of an NFT and hoping the price will go up so you make money from it, that’s not very different [from securities].”
The Howey Test is used to determine if a transaction qualifies as an investment contract, or security, which is subject to disclosures and registrations. An investment contract exists if an investment results in the expectation of profit from the efforts of others. The OpenSea case of insider trading against Nathaniel Chastain claims that he used anonymous hot wallets and accounts on OpenSea itself to purchase 45 NFTs over the course of a few months that he knew in advance would be featured on the home page. He would then sell them for a profit after they became featured and rose in value.“Misappropriating your employer’s confidential information is fraud, and once you move the proceeds of that fraud through the monetary system, it’s money laundering.
In similar news today, the Commodity Futures Trading Commission, which regulates commodities rather than securities,
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