| After
Chastain Found Guilty of Insider Trading
OpenSea NFTs then Reversed 7 Days to
Resolve
By Matthew
Russell Lee, Patreon Maxwell
Book
SDNY COURTHOUSE,
Jan 12 – Already there have
been several civil
Non-Fungible Token cases in
the U.S. District Court for
the Southern District of New
York.
On June 1, 2022 a
criminal case was unsealed,
charging NATHANIEL CHASTAIN, a
former product manager at
Ozone Networks, Inc. d/b/a
OpenSea (“OpenSea”), with wire
fraud and money laundering in
connection with a scheme to
commit insider trading in
Non-Fungible Tokens, or
“NFTs,” by using confidential
information about what NFTs
were going to be featured on
OpenSea’s homepage for his
personal financial gain."
Inner City
Press covered the trial
(below) until, on May 2, 2023,
Chastain was found guilty and
his sentencing set for August
22. Inner City Press was in
the courtroom as his attorneys
hugged him.
On August
8, 2023, Chastain's sentencing
memo was filed, asking for
time served or probation with
community service and/or home
confinement and stating "we do
not here argue the reasons why
Nate maintains his innocence."
They argue
that the property subject to
forfeiture is cryptocurrency
(ETH), citing the DDC case of
US v. Sterlingov, which Inner
City Press is also covering.
On August 15, the
US Attorney's Office asked for
21 to 27 months, citing the 24
months that Judge Loretta A.
Preska recently gave to Ishan
Wahi of Coinbase.
On August 21, the
eve of sentencing, Chastain's
lawyers put in letter seeking
to exclude fromt the loss
amount "after-featured NFT
purchases."
On August 22,
Chastain was sentenced to
three months in prison and a
$50,000 fine. Inner City Press
thread:
OK- near end of
sentencing in US v Nate
Chastain, described as 1st
"NFT insider trading" case.
But loss/gain amount is less
than $50,000, defense lawyer
Miller (who also repped Wahi)
says. Judge has taken 5 minute
break before announcing
sentence.
All rise! Judge:
Respect for the law and
general deterrence militate
for punishment. But he is a
first time offender. There are
mitigating curcumstances. He
has a potentially promising
future...
Judge: There was
a 2017 case, a few thousand
dollars of profit, less than a
year sentence. Mr Chastain, I
sentence you to 3 months in
prison."
Chaistain
appealed, and the conviction
was vacated. On January 5,
2026 Judge Furman set a
conference on possible
retrial: " ORDERED that the
parties appear for a
conference in this matter on
January 14, 2026, at 10:30
a.m. "
On January 12 the
US Attorney's Office wrote in
asking to cancel that, saying
"the parties are negotiating a
disposition of this matter..
order the filing of an update
by January 21."
Watch this site.
Back
when Chastain
was presented,
before U.S.
District Court
for the
Southern
District of
New York
Magistrate
Judge Barbara
C. Moses,
Chastain was
allowed to
leave after
signing a
$100,000 bond.
He can travel
throughout the
continental
US, but
urinanalysis
was ordered to
test for
drugs.
On June 15, 2022
Chastain was arraigned before
Judge Jesse M. Furman.
Discovery includes three
phones; there was no post
arrest statement. But
Chastain's lawyer took the
opportunity to ask how it
could be insider trader if
NFTs are neither securities
nor commodities.
On April
17, 2023, Chastain filed an
argument in opposition to the
US' motions in limine, that he
should be able try to convince
the jury "that this
prosecution is novel and
unprecedented," citing a 1984
Second Circuit case, US v.
Rosado, about Puerto Rican
independentistas.
On April 24,
there was jury selection.
Inner City Press went. There
was a Bronxite who works at
Chipotle and a special
education math teacher from
Rockland County. Then as Juror
18, a man who said he couldn't
hear what Judge Furman said.
He was excused, with the
room's acoustics cited - and
replaced by an entrepreneur
who said he has bought crypto
and NFTs and remembers hearing
of the case when it was
indicted, and also of Judge
Furman.
On April 25, the
US filed a letter seeking to
bar testimony by Chastain's
expert Professor Skinner about
an alleged lack of loss to
OpenSea, arguing that is not
an element of the crime
charged. In the alternative,
the US asks for a Daubert
hearing.
On April 26, a
government expert was on the
stand testifying about the IP
addresses of Chastain's
wallets and his profits from
NFTs, three times his monthly
$11,000 OpenSea salary.
On May 2 the jury
was deliberating when, just
before 5 pm, they sent out a
note: "Re Count One, Element
One. If the defendant viewed
the information as
confidential, but Devin
Finzer, the other signatory of
the Confidentiality Agreement
did not, is that enough
consider it confidential?"
Chastain
"believe[s] the jury be
instructed that the answer is
'no.'" Watch this site.
More on Substack
here
Inner City Press
will continue to cover these
cases.
The case is US v.
Chastain, 22-cr-305 (Furman /
Moses)
***
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