Insider Trading Drama: OpenSea’s Nathaniel Chastain Gets a Reprieve
Appeal Victory for Nathaniel Chastain
In a accident, Nathaniel Chastain, the previous product manager at OpenSea, finds himself free from a wire fraud and money laundering conviction. The U.S. federal appeals court has overturned the decision, which initially found him guilty of trading NFTs based on insider information.
What Went Wrong within the Trial?
The Second Circuit Court of Appeals delivered its decision on Thursday, declaring an important error within the jury instructions during Chastain’s 2023 trial. The court stated that jurors might need convicted Chastain for unethical behavior slightly than for misappropriating a recognized type of property—an important element under federal fraud law.
“Chastain argues that the jury was misled into believing they could convict him for defrauding OpenSea of an intangible interest not tied to traditional property rights,” the ruling explained. “And we agree with him.”
The Background: Chastain’s Initial Charges
Chastain faced charges in 2022 after allegedly using insider knowledge about which NFT collections would grace OpenSea’s homepage. This allowed him to purchase and sell them at a profit. The conviction led to a three-month prison sentence and a $50,000 fantastic.
Chastain’s Defense
In his appeal, Chastain argued that confidential details about NFT listings didn’t qualify as property under the law. He also highlighted that OpenSea benefited from the fees generated by the trades he conducted.
OpenSea: The NFT Giant’s Rise and Slowdown
OpenSea was the unrivaled leader within the NFT marketplace, hitting a powerful $5 billion in monthly trading volume at its peak in early 2022. However, the frenzy has waned, with the platform’s volume dropping to $82 million by June, as per Dune’s data.
Despite this decline, OpenSea still boasts nearly $1 billion in cumulative revenue, driven by over $40 billion in trading volume since its inception.
A Notable Reversal in Crypto Insider Trading
Chastain’s overturned conviction stands out as some of the high-profile crypto-related insider trading cases to be reversed on appeal.
Another Insider Trading Allegation Surfaces at Binance
In a related incident, Binance needed to suspend a member of its wallet division following allegations of insider trading during a recent token launch. The controversy began after a criticism suggested that one among its employees profited from confidential information.
The Allegations Against Binance’s Employee
According to Binance, an initial internal investigation revealed that the staffer—who joined the wallet team only a month prior—leveraged prior knowledge from a former role at BNB Chain to front-run trades. This worker allegedly anticipated a surge of interest following a Token Generation Event (TGE) for an undisclosed project. They reportedly used several linked wallets to amass a big amount of tokens before the general public announcement, selling off some holdings post-launch to secure profits.
While Binance hasn’t publicly identified the worker, online speculation has pointed fingers at Freddie Ng, a former BNB Chain operations manager who joined Binance Wallet in February. Users on X, including “py,” have connected wallets related to Ng’s online persona to at least one that earned over $82,000 trading the U DEX Platform (UUU) token—a project that peaked at a $31.5 million valuation on March 23.
Binance quickly suspended the worker and hinted at potential further disciplinary or legal consequences. The company also intends to cooperate with regulators within the relevant jurisdiction, though specifics remain undisclosed.
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