Overview
The Second Circuit Court of Appeals vacated the wire fraud and money laundering convictions of Nathaniel Chastain, a former product manager at NFT marketplace OpenSea, on July 31, 2025. Chastain had been accused of using confidential information about which NFTs would be featured on OpenSea’s homepage to buy and sell them for profit – an act prosecutors labeled as "crypto insider trading." The court found that the trial judge issued flawed jury instructions that allowed Chastain’s conviction based on vague notions of social conventions and inaccurate treatment of confidential business information in the absence of commercial value.
At trial, the jury was instructed that they could convict Chastain if he "conducted himself in a manner that departed from traditional notions of fundamental honesty and fair play in the general and business life of society." The Second Circuit held that a conviction based on the prosecution's "view of integrity" in business conduct was improper and perpetuated an invalid legal standard.
The appellate court also considered whether the jury instructions provided at trial on the property element of wire fraud—that confidential business information qualifies as a traditional property interest even if it lacks commercial business value—was proper. The majority opinion, authored by Judge Menashi and joined by Judge Wesley, found that this jury instruction was erroneous and that prosecutors must prove that the misappropriation of confidential information did hold recognized commercial value to satisfy the property element of the wire fraud statute and obtain a conviction.
Judge Cabranes dissented, arguing that the majority's opinion "ignores unambiguous and binding Second Circuit and Supreme Court precedents which hold that confidential business information, standing alone and without any separate showing of commercial value, is properly considered property for purposes of the wire fraud statute."
Building upon recent Supreme Court rulings, including Ciminelli v. United States, Chastain's overturned conviction is yet another ruling that will limit prosecutors' ability to pursue wire fraud charges, particularly as a workaround in crypto cases where the classification of digital assets as securities or commodities remains unsettled.
