In July 2025, after a long tug-of-war from conviction and imprisonment in 2023 to appeal and retrial, the case of former OpenSea product manager Nathaniel Chastain took a dramatic turn — the prosecution chose to conclude the case through a Deferred Prosecution Agreement (DPA) and plans to formally withdraw the case about a month later. The turning point came from a key determination by the U.S. Court of Appeals for the Second Circuit: the data displayed on the OpenSea homepage does not constitute "property" under the wire fraud statute. This ruling not only overturned the original conviction but also directly brought the debate over whether NFTs and broader crypto assets constitute protectable property under U.S. law to the forefront, raising a deeper question: how much has the enforcement space of the U.S. Department of Justice been compressed when the boundary of "information as property" is redrawn?

The Twisted Trajectory from NFT "Insider Trading Criminal" to DPA Defendant

● Starting Point of Conviction: In 2023, Chastain was convicted by a jury of wire fraud and money laundering for using information about NFTs that were about to be listed on the OpenSea homepage during his tenure. He was accused of buying NFTs before they were publicly displayed, then selling them after they appeared on the homepage and their prices were driven up by traffic, thus profiting from it, leading to widespread labeling of him as an "NFT insider trader" — although this characterization itself remains to be further defined and validated in academia and industry.

● Existing Penalties: Based on the original judgment, Chastain has already served about 3 months in prison and agreed to forfeit 15.98 ETH, valued at approximately $47,330 at the time (all data from a single source). These established facts make this case a rare example of not being an "attempt" but having already incurred substantial penalties, which then shifted direction through appeal and procedure, enhancing the contrast for the subsequent emergence of the DPA.

● Deferred Prosecution Path: After the Second Circuit Court of Appeals overturned some key conviction logic, the prosecution reached a Deferred Prosecution Agreement with Chastain, planning to formally withdraw the case in about a month according to existing public information. Specific terms have not been disclosed, but the procedure generally means that if the agreement conditions are met within a certain period, the prosecution will abandon further retrial or additional charges, and the case will be formally concluded rather than going to substantive trial again.

● Judicial Fluctuation Concerns: There have begun to emerge voices in the market and public opinion questioning whether the procedure of "first sentencing, executing, then concluding with a DPA" reflects a fluctuation in judicial standards or even self-correction. Some opinions point out that this reflects the judicial authority's standards are not yet stable in dealing with new types of crypto cases. However, it must be emphasized that these are all comments awaiting verification, neither representing the court's formal position nor having been confirmed by regulatory agencies.

A Single Sentence from the Appeals Court Shifts the Foundation of NFT "Information as Property"

● Core Overturning Reason: In its July 2025 ruling, the U.S. Court of Appeals for the Second Circuit stated that the information displayed on the OpenSea homepage does not constitute "property" that can be protected under the wire fraud statute, as these front-end display data do not possess independent, separable commercial value attributes. In other words, "which NFT will be displayed on the homepage" is seen by the court more as an operational arrangement and recommendation result, rather than property information like company accounts or confidential reports.

● Comparison with Traditional Insider Information: In traditional securities insider trading cases, the protected information typically includes undisclosed financial data, merger plans, significant contracts of publicly listed companies, which directly relate to company valuation, stock price expectations, and investor decisions, and are widely regarded as having clear property characteristics. In Chastain's case, the so-called "insider" information is merely the front-end positional information about which NFTs will be displayed and how they will be ranked, which has a more indirect relationship with the company's overall assets or shareholder rights. The court thus refused to simply analogize it to traditional insider property information.

● Limitations on Applying Wire Fraud to Platform Data: This determination effectively drew a red line for the prosecution — they can no longer easily categorize internal sorting, recommendation algorithm logic, and display arrangements of platforms as "property" under the wire fraud statute. Once the homepage display information is viewed as non-property, then the trading activities surrounding that information lose key constitutive elements under the wire fraud charge, forcing law enforcement to seek clearer paths of fraud or unjust enrichment in future cases, rather than relying on the broad logic of "information = property."

● Judicial Reference for NFTs and Crypto Products: For NFTs and broader crypto products, this ruling provides an important reference sample: not all information related to price that can produce economic effects automatically equates to protectable property under the wire fraud statute. The division of which parts of homepage display, recommendation positions, and trending rankings have property characteristics and which parts are merely operational choices is likely to be repeatedly cited in future cases, providing boundary signals for various crypto platforms when designing internal rules.

Concerns and Real Constraints on DOJ Enforcement Being "Choked"

● Claims of Weakened Enforcement: Some market voices believe that this ruling may weaken the U.S. Department of Justice's enforcement power in the crypto field, arguing that the traditional and powerful weapon of wire fraud has been significantly limited when it comes to internal platform information. However, this judgment is currently more of a commentary interpretation and remains a viewpoint awaiting verification; it cannot be used to deduce a comprehensive shift in overall enforcement strategy based on a single case, but can only be seen as an early signal of future trends.

● Strategic Shift in Charge Selection: From the prosecution's perspective, when the standard of "information as property" is restricted, they may be forced to rely more on traditional charges such as fraud, market manipulation, money laundering, and conspiracy, which have clearer constitutive elements when targeting NFT transactions and platform employee behaviors, rather than using wire fraud as a catch-all clause. In other words, charges will require clearer chains of victims, losses, and false statements, rather than merely relying on "possessing undisclosed platform sorting information + profiting from trading" to secure a conviction.

● Whether Compliance Gray Areas Are Narrowed: From a compliance perspective, this ruling does not automatically make internal platform data, recommendation rules, and employee trading behaviors "safe," but it does compel platforms and law enforcement to make finer distinctions in criminal risk identification. Which internal information, if misused, could constitute fraud against users or partners? Which is merely an internal operational preference? The court's standards leave some space for platforms but also require them to provide clearer disclosures and rules to avoid repeatedly jumping around in gray areas.

● Passive Adjustments in Similar Case Charge Strategies: As an important judicial precedent in the NFT compliance field, this case has practical traction for similar cases currently under investigation or intended for prosecution. For those originally planned to base charges on "platform internal sorting or recommendation data = property," the prosecution may have to reassess the evidence structure, rewrite the charge combinations in the indictment, and even in some cases settle for civil enforcement or settlement mechanisms instead of criminal prosecution to reduce the risk of being overturned at the appeal stage.

The Homepage Traffic Entry: A Commercial Gold Mine and Legal "Non-Property" Discrepancy

● The Commercial Reality of Homepage Display Positions: On NFT platforms like OpenSea, homepage display positions often mean significant exposure and transaction amplification effects for project parties and creators. Being recommended on the homepage or entering "hot" or "featured" sections can significantly boost transaction volume and floor prices in a short time, even changing the life trajectory of a project. This is why project parties are willing to spend high costs on marketing and community mobilization just to secure a chance to appear on the homepage.

● The Gap Between Significant Commercial Impact and Legal Property Threshold: However, from a legal perspective, "having significant commercial impact" does not necessarily equate to "constituting protectable property under the wire fraud statute." Wire fraud emphasizes definable, possessable, and improperly deprived property interests, while homepage ranking as an operational choice raises the question of whether it is a "right" owned by the platform or users, or merely an internal policy arrangement. The court in this case provided a negative answer, highlighting the gap between commercial importance and legal protection thresholds.

● The Necessity of Internal Systems: Even if homepage ranking and recommendation data are viewed by the court as non-property, can platforms allow employees to engage in self-trading around this information? The answer is clearly no. Platforms still need to implement internal systems — including prohibiting employees from buying and selling NFTs that are to be recommended, mandatory reporting of personal holdings, and establishing blind mechanisms — to control potential conflicts of interest and avoid exposing themselves to greater risks under civil liability, reputational risks, and future potential new regulatory frameworks.

● The Regulatory Gap Between Commercial "Golden Advertising Space" and Legal "Non-Property": When the commercial world views homepage entries as golden advertising spaces, even competing in an auction-like manner, the court has determined that they do not possess protectable property attributes. This discrepancy inevitably creates regulatory gaps — employees profiting from homepage information may not touch the wire fraud red line but could still undermine user trust and market fairness. How this gap will be filled is likely to become a key topic in subsequent legislative and regulatory guidance.

Compliance Insights for NFTs: Redrawing Information Boundaries and Platform Self-Regulation

● Direct Insights for Platforms: The Chastain case serves as a clear warning for NFT platforms: even if criminal law's recognition of "information as property" has shrunk, internal trading policies, information disclosure rules, and employee account management remain core defenses. Platforms need to systematically sort out the types of information employees have access to, trading permissions, and scenarios that may lead to conflicts of interest, using written policies rather than post-facto explanations to demonstrate that they have substantively constrained insider behavior.

● Red Lines for Project Parties and Traders: From the perspective of project parties and traders, when learning about platform listing rhythms, recommendation plans, and homepage schedules, they also need to be aware of the potential compliance and ethical red lines. Gaining advance knowledge that they will be featured on the homepage and manipulating the secondary market, engaging in joint speculation, or misleading the community, even if it does not currently constitute wire fraud, may in the future fall under new market manipulation or unfair trading rules, becoming a breakthrough point for regulatory accountability.

● Drawing Boundaries Before Standards Are Unified: In the phase where judicial standards are not unified, compliance teams cannot expect to "wait for case law"; a more realistic approach is to predefine behavioral boundaries through contract terms, user agreements, and third-party audit mechanisms. For example, clearly stating in user agreements the trading prohibitions and limits for employees and related accounts, the scope of information usage, and consequences for violations, and regularly having external agencies check compliance execution to form a verifiable and court-recognized compliance evidence chain.

● Proactive Governance and Retrospective Risks of Future Legislation: It must be acknowledged that if the industry chooses to "exploit loopholes" during the regulatory ambiguity period, even if it temporarily avoids the direct application of current charges like wire fraud, once new legislation or guidance targeting platform data and insider trading emerges in the future, related behaviors may still be subject to retrospective scrutiny under certain conditions. Proactively strengthening governance is not just a moral choice but also reserves buffer space for future uncertain regulatory environments.

The First Controversy's Conclusion Is Not the End: The "Property" Dispute in the Crypto World Has Just Begun

● Narrative Redrawing: The Chastain case, from conviction in 2023 to appeal reversal in 2025, and then concluding with a Deferred Prosecution Agreement, fully presents how the narrative of NFT "insider trading" has been deconstructed, rewritten, and partially corrected in judicial practice. It showcases the applicability tension of the traditional wire fraud framework when facing new crypto facts, while also clarifying for platforms and practitioners that criminal characterization is far from the "final word" as claimed by early public opinion.

● Not a "Get-Out-of-Jail-Free Card": Although this case has weakened the space for simply viewing platform display data as property, it does not mean that NFT trading behaviors have received a "get-out-of-jail-free card." Employees abusing internal platform information, project parties manipulating traffic entries, and traders profiting from asymmetric information may still violate fraud, money laundering, market manipulation, and other legal norms, and could even face significant civil liabilities and collective lawsuit pressures.

● Direction for Filling Regulatory Gaps: Looking ahead, U.S. regulatory agencies are likely to fill the regulatory gaps between platform data and insider trading through new legislation, updated guidance, or strengthened civil enforcement. Whether it is a more precise definition of "protectable digital property" or specialized regulations on the trading behaviors of platform employees and related parties, these are foreseeable policy evolution directions, although the pace and intensity have yet to be determined.

● The Ultimate Focus of Controversy: For the entire crypto industry, what truly determines the direction of the compliance game is not the win or loss in individual cases, but the answer to the fundamental question of "what constitutes protectable digital property." Whether homepage display data, algorithmic recommendation results, on-chain behavioral profiles, and user preference models will gradually be included in the category of property protection will directly shape the product design, internal governance, and underlying risk management logic of crypto platforms in the next decade.

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