Former OpenSea manager convicted of insider trading appeals for a review of his sentence
According to his lawyers, the confidential information of the marketplace used by the defendant had no commercial value
19.01.2024 - 12:35
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2 min
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What’s new? Nathaniel Chastain, a former manager of the NFT marketplace OpenSea, who was convicted of insider trading, has filed an appeal to overturn his conviction or hold a retrial. According to his lawyers, he was entitled to an acquittal because US authorities failed to prove that the trading platform’s token-related information had commercial value and was protected property.
What else is known? Chastain was indicted back in June 2022. At OpenSea, he headed the product department and was responsible for selecting NFT collections that were posted on the homepage of the platform’s website. As the DOJ learned, he used confidential information about upcoming new offerings to his advantage, buying tokens from the selected collections in advance for resale at 2-5 times higher prices.
Chastain conducted such transactions from June through September 2021, reselling a total of 45 tokens. He also used anonymous wallets and accounts to conceal his identity. Later that year, he was fired following an internal OpenSea investigation, and in August 2023, he received three months in jail and a $50 000 fine for fraud and money laundering. At the same time, he was allowed to begin serving his sentence on November 2.
The defense managed to reduce the 21-27 months of imprisonment requested by the prosecutor’s office, arguing that the defendant lost his job, reputation, and multi-million dollar stake in OpenSea.
In the new appeal, the lawyers emphasize that not all confidential information is proprietary, for that it must also be of commercial value to the owner, i.e. OpenSea. They say the marketplace’s business model is built on generating revenue from transaction fees from NFTs, not monetizing Chastain’s ideas about which collections should be promoted on the homepage.
The lawyers insist that OpenSea profited from Chastain’s actions, as he also paid transaction fees on the platform.
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