OpenSea’s Former Product Manager Appeals Insider Trading Case, Arguing Displayed NFT “Information” is Not Property.
Cointelegraph reported that Nathaniel Chastain, the former product manager of OpenSea who was previously accused of insider trading with NFTs, appealed to the court a few days ago, claiming his right to be acquitted. He argued that the prosecution failed to prove that the “NFT information” displayed on OpenSea belonged to the platform and therefore was not legally protected.
According to court documents submitted to the US Court of Appeals on the 16th, Chastain’s legal team claimed that the prosecution failed to prove that the “NFT-related information” on OpenSea was property, and therefore he should be acquitted.
Chastain’s lawyer emphasized that Chastain profited from the NFT display information obtained from the OpenSea website, which had no “commercial value” to the platform itself. Therefore, it should not be considered “protected property.” The lawyer further added, “OpenSea’s business model and revenue generation come from transaction fees on its website for NFT trades, not from Chastain’s NFT display decisions.”
However, the prosecutor Damian Williams had previously stated firmly, “Such a judgment should send a warning to other insiders within companies. We will not tolerate insider trading in any market.”
Earlier, Chastain was charged by the US prosecution in June 2022 for using his business advantage to influence the NFTs displayed on OpenSea’s homepage. He purchased at least 45 NFTs at a low price before they were listed and then sold them at a high price after the listing through extensive promotion, making illegal profits exceeding $50,000.
Subsequently, Chastain was detained by the Federal Bureau of Investigation (FBI) and convicted in May of the following year for telecommunication fraud and money laundering. The prosecutor requested a sentence of 21 to 27 months of imprisonment for Chastain.
It is reported that this case is being compared to the Coinbase product manager insider trading case that occurred in September 2022. The three defendants in that case also profited from early knowledge of upcoming token listings, making illegal profits of up to $1.5 million.
In the end, the defendants in the Coinbase case were sentenced to 2 years in prison and the same length of supervised release and will serve their sentences in a federal correctional institution in New Jersey.
In the OpenSea case, Chastain was subsequently sentenced to 3 months of home confinement, a $50,000 fine, 200 hours of community service, and the forfeiture of approximately 15.98 ETH valued at around $39,000.
Now, Chastain’s lawyer has announced that they will appeal the conviction and request a retrial. If Chastain is ultimately found guilty, this case will set a precedent in the NFT field and provide a basis for future judgments.
Coinbase
OpenSea
Insider trading
NFTs
