Appeals Court Overturns OpenSea Insider Trading Conviction

* A court overturned the wire fraud and money laundering convictions against Nathanial Chastain due to errors in jury instructions. * The case highlights the evolving legal complexities of insider trading for digital assets. On July 31, 2025, the U.S. Court of Appeals for the Second Circuit reversed the wire fraud and money laundering convictions of Nathanial Chastain, a former OpenSea product manager. Prosecutors had alleged that Chastain exploited confidential information about upcoming NFT showcases on OpenSea’s homepage, claiming he used this information to trade assets for personal profit in what they called the “first-ever digital asset insider trading scheme.” The court attributed its decision to flawed jury instructions, which incorrectly advised jurors they could convict Chastain based on unethical behavior even if he did not misappropriate a traditional property interest from OpenSea. The ruling emphasized that fraud requires the appropriation of a property interest and that unethical conduct alone does not constitute a legal violation. While the original conviction alleged that Chastain leveraged proprietary information for financial gain, the appeal hinged on the court's interpretation of intangible information as property, which proved pivotal in the reversal. This case, therefore, underscores the challenges in defining insider trading and intellectual property within the expanding digital asset landscape. In addition, Chastain alleged during proceedings that OpenSea’s co-founder, Devin Finzer, engaged in similar practices by using internal company information for personal benefit. As a result, the appellate court noted these accusations suggest a lack of clarity in OpenSea’s policies on using proprietary information. Following the appellate ruling, the court remanded the case to the district court to conduct further proceedings consistent with the clarified legal standard. Meanwhile, market data reports from July 31 show POL (formerly MATIC) priced at $0.214, reflecting a 2.129% decrease in 24-hour trading volume.