A U.S. federal appeals court has overturned the conviction of Nathaniel Chastain, former product manager at NFT marketplace OpenSea, for insider trading of non-fungible tokens. The Second Circuit Court of Appeals ruled on July 31, 2025, that flawed jury instructions invalidated Chastain's 2023 conviction for wire fraud and money laundering.
Chastain was originally charged in June 2022 after allegedly using confidential information about which NFTs would be featured on OpenSea's homepage to make profitable trades. He received a three-month prison sentence and $50,000 fine in 2023. The appeals court determined jurors might have convicted based on unethical conduct rather than misappropriation of traditional property interests required under federal fraud statutes.
Reed Brodsky, Chastain's lawyer, emphasized: "The overturn centers solely on improper jury instructions, not on the merits of digital asset enforcement or the presence/absence of a digital property right." The ruling sets a potential legal precedent for NFT regulation but hasn't prompted immediate regulatory responses from agencies like the SEC.
Market impact appears minimal, with Ethereum (ETH) trading volumes and prices remaining steady according to on-chain data. OpenSea, which processed over $40 billion in cumulative NFT trades during its 2021-2022 peak, saw June 2025 volumes of approximately $82 million amid broader NFT market declines.