Overview

• A New York appeals court determined that internal information about OpenSea’s planned NFT listings did not constitute the company’s property under federal fraud laws, vacating Nathaniel Chastain’s 2023 wire fraud and money laundering convictions.
• The Second Circuit concluded that jury instructions improperly treated unethical business conduct as property misappropriation, mandating a retrial under correct legal standards.
• Chastain had been sentenced to three months in prison, three months of home confinement, three years of supervised probation, a $50,000 fine and forfeiture of 15.98 ETH after the DOJ touted his case as the first-ever digital asset insider trading scheme.
• The case will return to the Southern District of New York for further proceedings consistent with the appeals court’s decision on property-based fraud elements.
• Legal analysts warn the decision could influence future enforcement and judicial interpretations of insider trading and fraud laws in the rapidly evolving NFT and broader crypto markets.