April 19, 2024
Ex-OpenSea Manager Appeals, Contests NFT Conviction

Ex-OpenSea Manager Appeals, Contests NFT Conviction

Nathaniel Chastain, a former product manager at the non-fungible token (NFT) marketplace OpenSea, is appealing his conviction on charges of wire fraud and money laundering linked to insider trading.

In a filing with the United States Court of Appeals for the Second Circuit on January 16, Chastain’s legal team argued that he should be acquitted as the U.S. government failed to demonstrate that information about NFTs on OpenSea qualified as property. According to the defense, the information used by Chastain to profit from NFTs featured on the OpenSea website “had no commercial value” for the platform and was not considered “protected property.”

The appellate brief stated, “[C]onfidential information must have commercial value to its owner.” It argued that OpenSea’s business model was centered on earning revenue from commissions on NFT transactions rather than monetizing Chastain’s ideas on which NFTs to feature.

“OpenSea made money from Chastain’s trading, because it earned commissions when he used its platform to buy and sell the featured NFTs.”

During his 2023 trial in the U.S. District Court for the Southern District of New York, prosecutors presented evidence that Chastain had the authority to choose the NFTs featured on the OpenSea website. He bought 45 NFTs before their feature and later resold them for Ether, with the cryptocurrency ticker down to $2,516.

In May 2023, Chastain was convicted of wire fraud and money laundering, receiving a three-month prison sentence and a $50,000 fine. The appellate filing now seeks to reverse or vacate Chastain’s conviction, advocating for a new trial in its place.

Image by Freepik

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