The Blubber

On Wednesday, Nathaniel Chastain, a former product manager at OpenSea, the world's leading non-fungible token (NFT) marketplace, was found guilty of fraud and money laundering. Chastain was charged with using insider knowledge about which NFTs would be featured on OpenSea's homepage to engage in NFT trading.

Chastain was alleged to have purchased NFTs that he had chosen to highlight on the OpenSea website and then quickly sold them, generating over $50,000 in illicit profits. Federal prosecutors in Manhattan characterized the case as the first instance of insider trading involving digital assets.

Prosecutor Thomas Burnett emphasized in his closing argument on Monday that Chastain had exploited his position at OpenSea for personal gain and had attempted to conceal his actions through deception.

The charges against Chastain, which were announced in June of last year, marked the beginning of a series of high-profile legal cases related to digital assets initiated by the U.S. Attorney's office in Manhattan. Legal experts have noted that the case could have wider implications for assets that do not conform to existing regulations designed to prevent investment advisers, brokers, and others from trading based on material nonpublic information.

Chastain had entered a plea of not guilty. His defense team argued that during Chastain's tenure at OpenSea, the company did not consider information about which NFTs would be featured on its homepage to be confidential.

Defense attorney Daniel Filor told jurors in his closing argument on Monday that Chastain could not be held to a standard that did not exist at the time, adding, "Nobody told Nate that he couldn't use or share that information."

However, prosecutor Allison Nichols countered that Chastain had used anonymous OpenSea accounts to conduct the unlawful trades, which indicated that he was aware that his actions were improper.

Nichols argued to the jury in her rebuttal that Chastain's efforts to conceal his activities demonstrated that "he knew that he had violated OpenSea's confidentiality agreement."