cointelegraph.com
A US federal appeals court has overturned the conviction of Nathaniel Chastain, a former OpenSea manager found guilty of wire fraud and money laundering for using insider information to trade non-fungible tokens.
In a Thursday decision, the Second Circuit ruled that the jury was improperly instructed and could have convicted Chastain for unethical conduct rather than misappropriating a traditional property interest, a requirement under federal fraud statutes.
Chastain was initially charged with insider trading in June 2022, tied to OpenSea $NFT collectibles he bought and sold the previous year. In 2023, he was convicted of wire fraud and money laundering, receiving a three-month prison sentence and a $50,000 fine.
As Cointelegraph reported, Chastain appealed the conviction in early 2024, arguing that $NFT-related information does not qualify as protected property.
“Not all confidential information is property,” Chastain’s appeal stated, adding: “OpenSea made money from Chastain’s trading, because it earned commissions when he used its platform to buy and sell the featured NFTs.”
OpenSea is the world’s largest $NFT marketplace, with more than $40 billion in cumulative trading volumes, according to Dune. The marketplace rose to prominence during the 2021-2022 $NFT boom, with monthly trading volumes reaching $5 billion in January 2022.
Since that peak, OpenSea’s trading volumes have dropped significantly, mirroring the broader decline in $NFT market interest. In June, trading volumes on the marketplace were roughly $82 million.
This is a developing story, and further information will be added as it becomes available.