A former OpenSea product supervisor has efficiently overturned his conviction in what was as soon as hailed as the primary insider buying and selling case involving non-fungible tokens.
The ruling by a US federal appeals courtroom on Thursday marks a big setback for prosecutors hoping to use conventional monetary crime legal guidelines to the fast-evolving crypto sector.
The case centered on Nathaniel Chastain, a 35-year-old Massachusetts native who managed homepage curation at OpenSea, the world’s largest NFT market.
In Might 2023, Chastain was convicted of wire fraud and cash laundering for utilizing insider information to purchase NFTs simply earlier than they have been featured on the platform’s entrance web page, then flipping them for revenue.
Breaking Information: Reversal in Nate Chastain Case–2nd Circuit Tosses NFT "Insider Buying and selling" Conviction
In a surprising reversal, the U.S. Court docket of Appeals for the Second Circuit has vacated Nate Chastain’s conviction for wire fraud and cash laundering, dealing a critical blow to the… pic.twitter.com/l4iLispCX7— Carlo
(@TheDeFiDefender) July 31, 2025
OpenSea NFT Insider Case Undone by Misguided Jury Steerage
Court docket filings confirmed he made roughly $57,000 by 15 such trades, utilizing nameless wallets to hide his id. He later transferred the proceeds into his private account.
Prosecutors described the scheme as theft of confidential enterprise info, arguing it constituted a misuse of OpenSea’s property.
Nonetheless, on enchantment, the 2nd US Circuit Court docket of Appeals in Manhattan disagreed. In a 2-1 determination, the courtroom dominated that the jury acquired flawed directions, successfully permitting a conviction primarily based solely on unethical conduct fairly than precise theft of property with industrial worth.
Appeals Court docket Faults Obscure Jury Directions in OpenSea Case
Decide Steven Menashi, writing for almost all, mentioned the decrease courtroom erred by telling jurors that Chastain could possibly be responsible even when the knowledge he used lacked tangible worth to OpenSea. He additionally criticized the instruction that jurors might convict in the event that they discovered Chastain’s conduct violated broad notions of honesty and honest play.
Menashi warned that utilizing such a typical might make practically any misleading act a legal offense. The appeals courtroom returned the case to US District Decide Jesse Furman for additional proceedings. It’s not but clear whether or not prosecutors intend to retry Chastain.
Court docket Narrows Definition of ‘Property’ in Wire Fraud Instances
The ruling sharply restricted how the federal government can apply the wire fraud statute to confidential info. The courtroom held that such info will need to have clear industrial worth to the employer—one thing prosecutors did not show on this case.
The featured NFT information, in keeping with the opinion, was not monetized by OpenSea and was not handled as a precious asset internally. That made it too “ethereal” to qualify as property below the regulation.
Compounding the issue for the federal government, the jury was informed it might convict primarily based on conduct that was merely unethical. That instruction, the courtroom discovered, “tainted the decision past restore.”
Decide Jose Cabranes dissented, saying he would have upheld the conviction. The US Lawyer’s workplace in Manhattan has not commented on whether or not it plans to pursue the case once more.
Ruling Undercuts DOJ’s Early Effort to Police NFT Markets
Chastain had already served his three-month jail sentence whereas his enchantment was pending. His authorized group welcomed the choice, calling the case a “miscarriage of justice.”
The conviction was introduced in June 2022, because the NFT market was booming, estimated at practically $40b.
Prosecutors had positioned the case as a sign that the digital asset area wouldn’t escape scrutiny. Thursday’s ruling, nonetheless, might power the federal government to rethink the way it approaches crypto-related offenses.
In a separate matter, OpenSea itself got here below regulatory fireplace final yr when the SEC launched an investigation into whether or not the platform operated as an unregistered securities trade. That probe closed with out motion in February, in keeping with co-founder Devin Finzer.
The submit Ex-OpenSea Worker Cleared in First NFT Insider Buying and selling Enchantment — Right here’s What Modified appeared first on Cryptonews.