Nathaniel Chastain, former product manager at the NFT marketplace OpenSea, has appealed his conviction for wire fraud and money laundering related to insider trading charges. His legal team argued before the United States Court of Appeals for the Second Circuit, asserting that the information Chastain used for profit did not constitute property with trade value for the platform.
The defense highlighted that not all confidential information is property, particularly if it lacks commercial value to its owner. OpenSea’s business model was based on earning commissions from NFT transactions on the marketplace, not on profiting from Chastain’s selection of featured NFTs.
During the trial at the Southern District of New York in 2023, prosecutors presented evidence of Chastain’s authority to choose featured NFTs on OpenSea. He purchased 45 NFTs before they were highlighted and later resold them for Ethereum, making a profit.
In May 2023, Chastain was convicted of bank fraud and money laundering, sentenced to three months in prison, and fined $50,000. The appeal requests the overturning of his conviction or a new trial.
Meanwhile, OpenSea has faced financial losses, particularly after losing its leadership position in the NFT space following the launch of competitor Blur and the expectations of Web3 users around airdrop events.
