OpenSea former manager insider trading case reversal: Federal court overturns verdict, prosecution agrees to withdraw

【Crypto World】Another big scoop in the NFT circle. The U.S. Department of Justice recently made a decision—no longer pursuing the case against former OpenSea manager Nathaniel Chastain.

Here’s what happened: Chastain was accused of using his position to buy NFTs that were about to be featured on the OpenSea homepage in advance, then selling them later at a profit after the prices increased. In 2023, he was convicted of telecom fraud and money laundering. At first glance, this case seemed pretty solid.

But in July this year, the federal appellate court made a major turn—overturning the original verdict. The reason was crucial: the jury was misinstructed, and the issue of “commercial value” was not so straightforward. The court found that the data on the NFT homepage did not meet the federal telecom fraud law’s definition of property. In short, the previous judgment had flaws.

Manhattan prosecutor Jay Clayton then stated that since Chastain had already spent three months in prison and agreed not to contest the forfeiture of 15.98 ETH (worth about $47,330), there was no need to continue the fight. So, ultimately, an agreement was reached, and the case was dismissed after one month.

The reversal in this case also dealt a cold splash to the legal boundaries of NFTs and the crypto space. It seems that the legal definitions in this area are far more complex than previously imagined.