A U.S. Federal Circuit Court of Appeals overturned the conviction of Nathaniel Chastain, a former OpenSea manager, on wire fraud and money laundering charges, ruling July [Insert Date] that he did not use tradable property information.

In a significant ruling for the NFT industry, the U.S. Court of Appeals for the Second Circuit concluded on Thursday that the jury was improperly instructed. The court determined the fraud statutes require the misappropriation of property, whereas insider trading based on non-public information related to non-traditional assets like NFTs involves “unprotected confidential information unmoored from traditional property interests.”

Chastain was originally charged in June 2022 with insider trading concerning NFT collectibles on OpenSea, the NFT platform he formerly managed. He was convicted in May 2023 and sentenced to three months in prison and a $50,000 fine.

In his appeal, Chastain’s legal team argued that information about unlisted or newly trending NFTs does not qualify as protected property under federal securities or fraud laws. The court concurred with this characterization.

“Not all confidential information is property,” Chastain’s appeal contended. “OpenSea made money from [Chastain’s] trading activity based on that confidential information, because it earned commissions when he used its platform to buy and sell the featured NFTs.”

OpenSea, as reported by Dune Analytics, is the world’s largest NFT marketplace, having facilitated over $40 billion in cumulative trading volumes. It gained prominence during the 2021-2022 NFT boom.

However, trading volumes have significantly declined since 2022’s peak of approximately $5 billion monthly in January of that year. As of June, OpenSea’s trading volume had plummeted to roughly $82 million.