Justice Department Withdraws Prosecution of Former OpenSea Executive in Insider Trading Matter
Federal prosecutors have decided to abandon their criminal case against Nathaniel Chastain, an ex-OpenSea executive whose wire fraud and money laundering convictions were overturned on appeal.
Federal prosecutors have announced they will not pursue a retrial in the insider trading prosecution of a former executive at OpenSea, the nonfungible token marketplace, following a federal appellate court's decision to reverse his convictions this past July.
Prosecutors informed a federal court in Manhattan on Wednesday that they have reached a deferred prosecution agreement with Nathaniel Chastain and will drop the charges once the agreement expires in one month's time.
Manhattan US Attorney Jay Clayton explained in a written letter that the determination took into account the fact that Chastain had already completed portions of his original sentence, including a three-month incarceration period, and that he consented to forfeit 15.98 Ether (ETH) valued at $47,330 that prosecutors alleged came from his insider trading activities.
"The interest of the United States will be best served by deferring prosecution of this matter and not retrying the case," Clayton wrote.
In 2023, a jury found Chastain guilty on charges of wire fraud and money laundering, with federal prosecutors alleging that he leveraged his insider knowledge to purchase NFTs that were slated to be prominently displayed on OpenSea's platform and subsequently sold them for profit after their values increased due to the featured placement.
Jury given flawed instructions, says appeals court
The sentence imposed on Chastain included three months of imprisonment plus a $50,000 monetary fine, however, a federal appellate court reversed the conviction in July, determining that the jury received improper instructions and that NFT homepage placement data lacking commercial value does not qualify as property under federal wire fraud statutes.
This prosecution represented the inaugural digital asset insider trading case in the history of the United States, and supporters of cryptocurrency have referenced the reversed conviction as evidence for the need for more explicit legislation that would clarify how digital assets should be interpreted within the framework of existing legal statutes.
Under the agreement, Chastain will not be placed under the supervision of US Pretrial Services and retains the right to file an application seeking reimbursement of the $50,000 fine and $200 special assessment that he remitted after his initial conviction in May 2023.