The Second Circuit Court of Appeals has recently overturned the conviction of former OpenSea manager, Greg Chastain, under investigation for insider trading in the NFT sector.
Chastain's Charges
Greg Chastain was found guilty of wire fraud and money laundering in 2023 after purchasing NFTs he knew would soon be featured on OpenSea’s homepage. He served a brief prison sentence and was fined $50,000.
Court's Position
According to the new ruling, the jury received flawed guidance, which could have led to Chastain's conviction for unethical behavior rather than actual misappropriation of property—a requirement under federal fraud laws. The court also sided with Chastain's argument that confidential business plans aren't automatically considered property under the law.
Impact on the NFT Market
This case was one of the first to test how insider trading rules apply to NFTs. The NFT market saw unprecedented growth during the 2021–2022 crypto bull run, but OpenSea, once the dominant platform with $5 billion in monthly trading, now sees volumes drop to under $100 million.
The reversal of Chastain's conviction may have significant implications for how regulators and prosecutors approach insider activity in decentralized markets.
