The U.S. Court of Appeals has ruled to overturn the verdict against former OpenSea manager Nathaniel Chastain in the NFT insider trading case that was heard in 2023. The decision was made due to the recognition that the jury received erroneous instructions that did not require mandatory evidence of the commercial value of the disclosed information.
This is reported by Finway
Erroneous Jury Instructions and Overturning the Verdict
According to case materials, Chastain used insider information to purchase NFTs before these digital assets appeared on the OpenSea homepage, and then sold them for a profit. The investigation found that Chastain earned approximately $57,000 from 15 similar transactions, using anonymous accounts to conceal his activities.
The initial verdict included three months of imprisonment for wire fraud and money laundering. However, the appellate court concluded that the trial judge provided the jury with incorrect instructions, allowing them to convict based solely on “unethical behavior,” without proper evidence of commercial gain from the disclosed information.
“Without evidence of the commercial value of the information, such an approach would make virtually any violation of ‘fair play’ a crime,” noted Judge Steven Menashi.
Future of the Case and Impact on Digital Assets
Currently, the prosecution has not announced whether it plans to initiate a new trial. The case has been returned to the Manhattan District Court for further proceedings. Chastain’s lawyers stated that this decision is a “correction of a judicial error.”
This case has sparked a new wave of discussions among experts regarding the legal status of NFTs and the regulation of the digital asset market in the U.S. They believe that the appellate court’s decision may complicate future attempts to interpret similar cases as traditional insider trading crimes characteristic of the stock market.
It is worth noting that the court previously returned the Yuga Labs case regarding the NFT parody RR/BAYC for jury consideration.