Former Product Manager of OpenSea Appeals Insider Trading Case, Claiming Displayed NFT "Information" is not Property.

Cointelegraph reports that Nathaniel Chastain, former product manager of OpenSea, who was previously accused of insider trading involving NFTs, has appealed to the court a few days ago, claiming that he should be acquitted. He argues that the prosecution failed to prove that the "NFT information" displayed on OpenSea belongs to the platform and therefore, that data is not protected by law.

Former Product Manager of OpenSea Appeals

According to court documents filed on the 16th with the United States Court of Appeals for the Second Circuit, Chastain's legal team argues that the prosecution failed to prove that the "NFT-related information" on OpenSea constitutes property, and therefore, he should be acquitted.

Chastain's lawyer emphasized that Chastain profited from the NFT display information obtained from the OpenSea website, which does not have "commercial value" in and of itself, and therefore should not be considered "protected property":

Not all confidential information is property; the data must have commercial value to its owner, OpenSea.

It is further added that "OpenSea's business model and revenue generation come from transaction fees on NFTs traded on its platform, not from Chastain's decision-making regarding NFT displays."

However, the prosecutor in the case, Damian Williams, had previously made a strong statement:

Such a ruling should send a warning to other insiders in companies that we will not tolerate insider trading in any market.

Coinbase Also Had Insider Trading Incident

Prior to this, Chastain was charged by the U.S. authorities in June 2022 for using his position to decide which NFTs would be featured on the OpenSea homepage. He purchased at least 45 NFTs at a low price before they were listed and then sold them at a high price through extensive promotion after listing, making illegal profits of over $50,000.

Former OpenSea Product Manager Convicted of Insider Trading

Subsequently, Chastain was detained by the Federal Bureau of Investigation (FBI) and was convicted in May of the following year on charges of wire fraud and money laundering. The prosecutor in the case requested a sentence of 21 to 27 months in prison for Chastain.

It is reported that this case is being compared to the insider trading case involving a Coinbase product manager that occurred in September 2022. The three defendants in that case also profited from early knowledge of tokens about to be listed, making illegal profits of up to $1.5 million.

Ultimately, the defendants in the Coinbase case were sentenced to 2 years in prison and the same duration of supervised release, and will serve their sentences in a federal correctional facility in New Jersey.

In the OpenSea case, Chastain was subsequently sentenced to 3 months of home confinement, a $50,000 fine, 200 hours of community service, and the seizure of his current holdings of approximately 15.98 ETH, valued at about $39,000.

Now, Chastain's lawyer has announced plans to appeal and seek to have his conviction overturned for a new trial. If Chastain is ultimately found guilty, this case will set a precedent in the NFT space and provide a basis for future judgments in similar cases.