Nathaniel Chastain, previously a product manager at the non-fungible token (NFT) marketplace OpenSea, has lodged an appeal against his wire fraud and money laundering conviction related to insider trading.
In a filing submitted to the United States Court of Appeals for the Second Circuit on January 16, Chastain’s legal team asserted that their client deserved acquittal since the U.S. government failed to demonstrate that information concerning NFTs on OpenSea could be classified as property. According to Chastain’s attorneys, the information he used to gain profits from NFTs showcased on the OpenSea platform held “no commercial value” for the platform and did not meet the criteria of “protected property.”
The appellate brief emphasised that not all confidential information should be considered property and insisted that confidential information must possess commercial value for its owner. It argued that OpenSea’s primary revenue source was commissions from NFT transactions on its platform, not from monetizing Chastain’s concepts regarding the selection of featured NFTs.
The filing elaborated:
“OpenSea made money from Chastain’s trading, because it earned commissions when he used its platform to buy and sell the featured NFTs.”
During Chastain’s 2023 trial in the U.S. District Court for the Southern District of New York, prosecutors presented evidence indicating that Chastain had the authority to choose the NFTs featured on the OpenSea website. He acquired 45 NFTs before featuring them and subsequently sold them for Ether.
In May 2023, Chastain received convictions for wire fraud and money laundering, resulting in a three-month prison sentence and a $50,000 fine. The judge permitted him to delay surrendering to authorities until November 2. The appellate filing requested a reversal or vacation of Chastain’s conviction in favour of a new trial.