EddieJayonCrypto
31 Jul 25
A U.S. Appeals Court overturned the conviction of Nathaniel Chastain, former OpenSea product manager, who was initially found guilty of wire fraud and money laundering for allegedly using insider knowledge to profit from NFT features on OpenSea’s homepage. The court ruled that Chastain’s actions did...
A U.S. Appeals Court overturned the conviction of Nathaniel Chastain, a former OpenSea product manager, challenging what was considered the most prominent conflict of interest-related prosecution in the crypto industry in the United States. Chastain was initially found guilty of wire fraud and money laundering for allegedly manipulating insider knowledge about which NFTs would appear on OpenSea’s homepage to personally profit. He had been sentenced to three months in prison.
The appeals court determined that the prosecutors were wrong to argue that Chastain’s decisions about NFT features constituted company “property.” While his actions might still be unethical or potentially criminal, the court ruled such conduct did not amount to property fraud, suggesting a different charge like fraud based on unethical business dealings might have been appropriate. Importantly, a jury note indicated that OpenSea did not see the featured NFT information as confidential but agreed that Chastain’s trading was unethical.
The court also upheld the district court’s decision to exclude testimony about OpenSea CEO Devin Finzer’s own trades involving Polygon tokens, which Chastain’s defense tried to use to demonstrate unequal treatment. The appeals court agreed there was no evidence Chastain knew about Finzer’s trades at the relevant time or that this informed his conduct, supporting the lower court’s ruling.
Following the appeals ruling, the case has been sent back to the initial Manhattan district court for further proceedings aligned with the new legal interpretation. This development reshapes the legal landscape for insider trading claims within the rapidly evolving crypto marketplace.