The U.S. Court of Appeals overturned the conviction of former OpenSea manager Nathaniel Chastain. He was previously convicted of wire fraud and money laundering for using insider information to trade non-fungible tokens (NFTs).
In a ruling on Thursday, the U.S. Second Circuit Court of Appeals determined that the jury instructions were improper, potentially leading to Chastain's conviction based on unethical behavior rather than the misappropriation of traditional property rights, which is a requirement under federal fraud law.
“Chastain argues that the district court incorrectly instructed the jury that if he misappropriated intangible benefits unrelated to traditional property rights, the jury could find that he defrauded OpenSea of its property. He believes this error affected the jury's decision. We agree,” the court's ruling stated.
In June 2022, Chastain was charged with insider trading for buying and selling OpenSea NFT collectibles the previous year. In 2023, he was convicted of wire fraud and money laundering, sentenced to three months in prison, and fined $50,000.
According to Cointelegraph, Chastain appealed his conviction in early 2024, arguing that information related to NFTs does not constitute protected property.
“Not all confidential information is property,” Chastain noted in his appeal, adding, “OpenSea generated revenue from Chastain's trades because the platform charged a commission when he bought and sold specific NFTs on the platform.”
OpenSea is the largest NFT trading market globally, with a cumulative trading volume exceeding $40 billion. The platform rapidly rose during the NFT boom from 2021 to 2022, reaching a monthly trading volume of $5 billion in January 2022.
Since that peak, OpenSea's trading volume has significantly declined. The overall enthusiasm for the NFT market has also waned. In June, the platform's trading volume was approximately $82 million.
Dune data shows that the platform has generated a cumulative revenue of $944 million since its inception.
Related: Reports indicate that CoinDCX employees were arrested for an alleged $44 million cryptocurrency hacking incident.
Original: “Appeals Court Overturns Nate Chastain's Conviction in OpenSea Insider Trading Case”
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