31.07.2025 15:01

A federal appeals court has overturned the insider trading convictions of Nathaniel Chastain, a former product manager at OpenSea. The Second US Circuit Court of Appeals reversed the wire fraud and money laundering charges, a significant victory for Chastain, who had been seen as a pivotal figure in what the US Attorney's Office had termed the first-ever digital asset insider trading case.

Chastain's initial conviction stemmed from his alleged exploitation of his privileged access to OpenSea's internal information. He was accused of preemptively purchasing NFTs slated for prominent placement on the OpenSea homepage, profiting handsomely from their subsequent price surge after the platform featured them. This strategy, prosecutors argued, constituted illegal insider trading.

However, the appeals court’s decision hinges on a crucial point of law regarding jury instructions. The appellate judges determined that the original jury had been improperly instructed, allowing for a conviction based solely on unethical conduct rather than the legally required demonstration of a violation of OpenSea’s property rights. The prosecution’s case, therefore, failed to meet the necessary legal threshold for a conviction.

The case has now been returned to the Southern District of New York. Prosecutors have the option of retrying Chastain, though the overturned conviction represents a considerable setback for their efforts to establish precedents in the burgeoning field of cryptocurrency and NFT regulation. This reversal could have significant implications for future cases involving digital asset insider trading and the precise definition of property rights in the virtual space. Further developments will be closely watched by industry experts and legal professionals alike. The information for this report was gathered from internet sources.