Criminal Conviction In First NFT Insider-Trading Trial

On May 3, 2023, Nathaniel Chastain, former product manager of OpenSea, the largest market for non-fungible tokens ("NFTs"), was convicted by a jury of wire fraud and money laundering. The conviction was the first of its kind.

As Bloomberg Law explained, "[u]nlike most traditional insider-trading cases, which are centered around securities-fraud charges for misappropriating non-public information such as unreleased earnings reports, Chastain was charged with wire fraud." This charge "allowed prosecutors to skirt the issue of whether nonfungible tokens are legally classified as a security, a hotly debated topic in the world of digital assets."

An NFT is basically anything digital (like digital art) whose authenticity is verified using blockchain technology. One of Mr. Chastain's responsibilities was to select which NFTs would be featured on OpenSea's homepage. According to the Government, NFTs usually increase in value after being featured on OpenSea's homepage, as