US prosecutors have officially dropped their case against former OpenSea product manager Nathaniel Chastain, bringing an end to what was once framed as America’s first-ever NFT insider trading prosecution.
The move follows a major setback for the government last year, when a federal appeals court overturned Chastain’s conviction. On Wednesday, the Justice Department said it would enter a short, one-month deferred prosecution agreement before dismissing the charges permanently.
The case dates back to June 2022, when Chastain was arrested and accused of using confidential information from his job at OpenSea to buy NFTs just before they were featured on the platform’s homepage — a move prosecutors said allowed him to sell them later at a profit. He was charged with wire fraud and money laundering, even though NFTs are not legally classified as securities.
At the time, the case drew intense attention as a test of whether traditional financial crime laws could be applied to fast-moving digital asset markets.
Appeals court pulls the rug out
That legal theory ultimately unraveled. In July 2024, the 2nd US Circuit Court of Appeals ruled that jurors in Chastain’s trial were given flawed instructions. In a 2–1 decision, the court said jurors were wrongly told they could convict him for unethical behavior alone — even if the information he used had no real commercial value.
Judge Steven Menashi wrote that the lower court had gone too far by allowing a conviction without proving that OpenSea’s featured NFT information qualified as property under federal fraud laws. The appeals panel warned that relying on vague standards like “honesty and fair play” could effectively turn many forms of workplace misconduct into federal crimes.
The court also noted that OpenSea did not monetize or internally treat featured NFT data as a valuable asset, calling it too “ethereal” to meet the legal definition of property.
DOJ decides not to retry
In a court filing, Manhattan US Attorney Jay Clayton — a former SEC chair — said prosecutors would not retry the case. He pointed out that Chastain had already served three months in prison and agreed not to contest the forfeiture of 15.98 ETH, worth about $47,000.
“The interest of the United States will be best served by deferring prosecution of this matter and not retrying the case,” Clayton wrote.
Chastain was originally convicted in May 2023 after a week-long trial. Prosecutors alleged he bought dozens of NFTs ahead of their homepage promotion between June and September 2021, then sold them for two- to five-times their purchase price using anonymous wallets. They claimed he made roughly $57,000 in profit.
More than 300 defense attorneys later filed letters supporting dismissal, warning that treating confidential business information as property would criminalize a wide range of ordinary conduct.
Part of a bigger pullback on crypto enforcement
The dropped case also fits into a broader slowdown in US crypto enforcement. Federal regulators have recently stepped back from several high-profile actions, including cases involving Coinbase, Kraken, Consensys, and Cumberland DRW.
The SEC closed its investigation into OpenSea in February 2025, months after issuing a Wells notice that alleged the platform was operating as an unregistered securities marketplace. OpenSea founder Devin Finzer called the decision “a win for everyone who is creating and building in our space.”
According to Cornerstone Research, the SEC brought just 13 crypto-related enforcement actions in 2025 — a 60% drop from the year before and the lowest total since 2017.
What happens next
Chastain will not face further supervision and may seek the return of the $50,000 fine and special assessment he paid after his conviction.
Meanwhile, the NFT market itself looks very different from when the case first emerged. Global NFT market capitalization now stands at about $2.56 billion — down nearly 85% from its April 2022 peak, when digital collectibles were booming and Chastain’s case was just getting started.
