U.S. prosecutors have decided not to retrial their wire fraud and money laundering case against a former manager of the non-fungible token (NFT) platform OpenSea. This decision follows a significant ruling from a federal appeals court in July that overturned the previous convictions. On Wednesday, prosecutors informed a Manhattan federal court about the agreement, which delays prosecution for one month. Following this period, the case will be formally dismissed.
In a letter addressed to the court, Manhattan U.S. Attorney Jay Clayton, who previously chaired the Securities and Exchange Commission, explained that the decision stemmed from the fact that the defendant, Chastain, has already served parts of his original sentence, including three months in prison. Additionally, Chastain agreed not to contest the forfeiture of 15.98 Ether (ETH), valued at approximately $47,330, which prosecutors claimed he earned through fraudulent activities.
Clayton stated, “The interest of the United States will be best served by deferring prosecution of this matter and not retrying the case.” Chastain was found guilty by a jury in 2023 of wire fraud and money laundering, with allegations that he exploited his role to purchase NFTs that would later be displayed on OpenSea’s website before selling them at a profit when their prices surged.
However, the appeals court found fault with how the jury was instructed during the trial, determining that the NFT homepage data in question lacked commercial value, thus not qualifying as property under federal wire fraud laws. This landmark case has been noted as the first instance of digital asset insider trading in the U.S., igniting discussions among crypto advocates for clearer legislative definitions concerning digital assets and their regulation.
As part of the new agreement, Chastain will not be under the supervision of U.S. Pretrial Services and is permitted to apply for the return of the $50,000 fine and a $200 special assessment he paid following his initial conviction in May 2023. Chastain’s situation contributes to a broader trend of dismissed or dropped investigations, lawsuits, and prosecutions related to cryptocurrency that the Justice Department and regulators have experienced due to procedural or evidentiary complications.
