In a dramatic turn for the crypto world, the Second Circuit on Thursday overturned the fraud conviction of Nathaniel Chastain, a former OpenSea manager once accused of pioneering “insider trading” in NFTs. The appellate panel ruled that jurors may have convicted him for conduct deemed unethical but not necessarily fraudulent.
Chastain, who allegedly pocketed $57,000 by buying NFTs he knew would be featured on OpenSea’s homepage and then flipping them at a profit, had been convicted in Manhattan of wire fraud and money laundering. That conviction is now vacated, with the case remanded back to the lower court.
The Heart of the Legal Dispute
Writing for the majority, U.S. Circuit Judge Steven Menashi agreed with Chastain’s defense that his decisions about which NFTs would appear on the site’s homepage did not qualify as “property” under the wire fraud statute.
“We agree with Chastain that confidential business information must have commercial value to a company to qualify as its property,” Menashi wrote, emphasizing that merely knowing what artwork would be promoted lacked inherent value to OpenSea itself.
