US Prosecutors Drop Retrial in OpenSea Insider Trading Case

TheNewsCryptoPublished on 2026-01-23Last updated on 2026-01-23

Abstract

US prosecutors have dropped their case against Nathaniel Chastain, a former OpenSea employee, following an appeals court reversal of his 2023 conviction for wire fraud and money laundering. The court ruled that the non-public information he used to trade featured NFTs did not constitute “property” under federal fraud statutes. Chastain had already served part of his sentence, including prison time, and agreed to forfeit approximately $47,000 in Ethereum. The dismissal, expected next month, marks a significant legal outcome regarding the application of insider trading laws to NFTs and digital assets.

The US DOJ has announced its intention to dismiss the case against Nathaniel Chastain, a former official at the online marketplace for digital trading cards known as OpenSea, over an insider trading case against the defendant, whose deferred prosecution plea bargain is set to expire the following month.

Charges filed against Chastain stemmed from a case initiated by federal prosecutors after his 2023 conviction for wire fraud and money laundering offenses. Allegations suggested Chastain made use of his position to learn information beforehand about the non-fungible assets chosen to appear on OpenSea’s homepage and purchase them to make a later profit from selling them.

Appeals Court Reversal and Legal Result

A federal appeals court threw out Chastain’s conviction in July for improper jury instructions on what constitutes “property” under the federal wire fraud statutes. The court ruled that non-public information of which NFTs would be featured (and data not shown to hold commercial value to OpenSea itself) did not meet the statutory definition of property subject to fraud charges.

Following that ruling, prosecutors said earlier in the week that they would not seek to retry him. The motion to dismiss came after Chastain spent part of his original sentence, including time in prison, and agreed not to contest the forfeiture of about 15.98 ETH, worth around US $47,000, linked to his NFT trading.

Deferred Prosecution Agreement

Within the agreement, the government has agreed to drop the charges upon compliance with the terms and conditions outlined in the agreement. The dismissal of the charges is expected in the coming month. The government argued that the agreement and the subsequent dismissal of charges are in the interest of justice by citing the partial service of Chastain’s sentence and the forfeitures.

The case was significant as it was one of the initial attempts to apply insider trading cases to NFTs and other digital assets under existing federal fraud statutes. It should also be pointed out that in a previous case involving NFT assets, it was overturned by an appeals court due to the legal complexities involved.

The DOJ’s decision to decline the trial of the case of an insider trading prosecution of the former OpenSea executive was due to the dismissal of the deferred prosecution agreement. There is no doubt that the court’s reversal was key to shaping the issue of the enforcement of the digital asset space under the definitions of the relevant statute.

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