In a significant legal milestone for the cryptocurrency and NFT community, former OpenSea product manager Nathaniel Chastain has reversed his 2023 insider trading conviction.
Nathaniel Chastain was initially convicted of money laundering and wire fraud for trading on inside information while managing homepage posts on OpenSea, the world’s largest marketplace for non-fungible tokens.
In particular, he was accused of purchasing NFTs before having them promoted on OpenSea’s home page and reselling them for profit.
At the time, prosecutors framed it as the first insider trading case with non-fungible tokens, with the hope of creating a precedent for charging crypto abuse under current money crime laws.
Appeals Court Finds Jury Instructions Were Legally Flawed
In a 2-1 decision ruling by the 2nd US Circuit Court of Appeals in Manhattan, the jury at Chastain’s first trial was improperly instructed, and there was a possibility the conviction could have occurred based on unclear or arbitrary criteria.
Writing for the majority, Judge Steven Menashi emphasized that the lower court erringly directed jurors that they could convict Chastain even if the confidential information he relied upon contained no tangible value to OpenSea.
An excessively loose end, the appeals court found, would be if the jurors could convict on grounds that Chastain merely acted in violation of “broad notions of honesty and fair play.”
Therefore, the court held that the verdict had been indefinitely tainted and remanded the case for further action by the district court below.
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Court Rejects Broad Definition of ‘Property’ in Wire Fraud Law
At the center of the appeals court ruling was its dismissal of the government’s argument that Chastain’s actions amounted to theft of property of value.
The panel ruled that the NFT listing data Chastain viewed, while confidential, contained no commercial value to OpenSea.
It wasn’t monetized, nor used as a key business asset, and therefore failed to meet the definition of “property” under federal wire fraud laws.
The narrow reading significantly limits the power of prosecutors to file charges for wire fraud in future cryptocurrency cases.
It is a sign of a broader judicial hesitance to apply traditional financial law to the high-speed crypto environment.
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Victory in Court Reflects Broader Patterns in Regulatory Landscape
The decision is part of a series of recent legal events involving OpenSea.
In November 2024, two users dropped a securities lawsuit against the platform after a federal judge ruled that OpenSea could compel arbitration, effectively shielding the company from lawsuits in the courtroom.
Later in February 2025 it was reported that the SEC formally closed its investigation into OpenSea, a development that was welcomed by industry icons like Coinbase CEO Brian Armstrong.
These cases reflect a growing resistance by regulators and judges to pursue or continue litigation in the grey and emerging field of digital assets and NFT trading with zeal.
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