Nathaniel Chastain, the former product manager of NFT marketplace OpenSea, has appealed his conviction for wire fraud and money laundering related to insider trading.
In a January 16 filing in the United States Court of Appeals for the Second Circuit, Nathaniel Chastain’s lawyers claim that the U.S. government failed to prove that information related to NFTs on OpenSea qualified as property.
They argue that “not all confidential information is property” and that confidential information must have commercial value to its owner.
Chastain’s legal team argues that the information he used to profit from NFTs featured on the OpenSea website “had no commercial value” to the platform and was not considered “protected property.”
According to the brief, OpenSea’s business model was to earn revenue from commissions on NFT transactions conducted on its website, not to monetize Chastain’s ideas about which NFTs to feature.
The filing also states that 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 that he had the authority to choose what NFTs would be featured on the OpenSea website.
He purchased 45 NFTs before they were featured and then resold them for Ether (ETH).
In May 2023, Chastain was convicted of wire fraud and money laundering and sentenced to three months in prison and a $50,000 fine.
The appellate filing requests that Chastain’s conviction be reversed or vacated in place of a new trial. Chastain’s appeal raises important questions about the legal definition of property in the context of digital assets and NFTs.