US Prosecutors Drop OpenSea Insider Trading Case After Appeal

This effectively closes what was the first major insider trading case involving digital assets. At the same time, a Cornerstone Research report showed the SEC cut crypto-related enforcement actions by roughly 60% in 2025, with new cases under Chair Paul Atkins largely focused on straightforward fraud rather than broad regulatory theories. Together, the developments show that the US is shifting away from aggressive regulation by enforcement toward a more selective framework-driven approach to US crypto oversight.

OpenSea Insider Trading Case Ends

US prosecutors decided not to retry their insider trading case against a former manager at NFT marketplace OpenSea after a federal appeals court overturned his conviction earlier this year.

On Wednesday, prosecutors informed a Manhattan federal court that they entered into a deferred prosecution agreement with Nathaniel Chastain, effectively bringing the case to a close once the agreement expires in about a month. Under the terms of the deal, the government will dismiss the charges, and Chastain has agreed not to contest the forfeiture of 15.98 Ethereum, worth roughly $47,000, which prosecutors say he earned from the trades at the center of the case.

Nathaniel Chastain

In a letter to the court, Manhattan US Attorney Jay Clayton said the decision was based on several factors, including the fact that Chastain already served part of his original sentence. That punishment included three months in prison, along with a $50,000 fine and additional financial penalties that were imposed after a jury convicted him in 2023 of wire fraud and money laundering. Clayton wrote that deferring prosecution and declining to retry the case would best serve the interests of the United States.

The original case drew a lot of attention from both legal and crypto circles. Prosecutors accused Chastain of exploiting his position at OpenSea by purchasing NFTs he knew would soon be featured on the platform’s homepage, then selling them after their visibility drove up prices. At the time, the prosecution was described as the first insider trading case involving digital assets, and it was often used as a test of how existing financial crime laws could be applied to crypto and NFTs.

(Source: US Court of Appeals for the Second Circuit)

That narrative shifted in July, when a federal appeals court overturned Chastain’s conviction. The court ruled that jurors were given flawed instructions and found that the NFT homepage placement data involved in the case did not constitute “property” with commercial value under federal wire fraud statutes. The decision was quickly seized upon by crypto advocates, who argued that it proved the need for clearer legislation defining how digital assets fit in traditional legal frameworks.

As part of the deferred prosecution agreement, Chastain will not be supervised by US Pretrial Services and may apply to recover the $50,000 fine and $200 special assessment he paid after his conviction. 

SEC Crypto Enforcement Fell Sharply in 2025

US securities regulators sharply scaled back their crypto-related enforcement activity in 2025 after a leadership shift at the Securities and Exchange Commission (SEC). According to a new report from Cornerstone Research, the SEC initiated just 13 crypto-related enforcement actions during the year, down from 33 in 2024. The roughly 60% decline was  the lowest level of crypto enforcement by the agency since 2017.

Number of SEC enforcement actions initiated (Source: Cornerstone Research)

The report points out that the drop in cases coincided with the appointment of Paul Atkins as SEC chair. Of the 13 actions brought in 2025, five were initiated before the departure of former chair Gary Gensler in January, while eight were launched under Atkins’ leadership. Those newer cases were primarily focused on allegations of fraud rather than broad claims tied to registration or market structure violations.

That distinction is important for an industry that spent much of the past several years navigating what critics described as “regulation by enforcement.” Under Atkins, the SEC appears to be concentrating on cases involving clear investor harm that are more straightforward to litigate, rather than pursuing expansive legal theories that test how existing securities laws apply to digital assets.

Gensler vs Atkins (Source: Cornerstone Research)

Cornerstone’s analysis also found that enforcement resolutions stayed active, with 29 crypto-related actions concluded in 2025. Seven of those cases were dismissed under Atkins’ tenure. Financial penalties imposed on digital asset firms and individuals totaled $142 million for the year, which was less than 3% of the penalties levied in 2024.

Robert Letson, a principal at Cornerstone Research, said enforcement under Atkins reflects an evolution in the SEC’s oversight strategy for digital assets. Legal observers say the trend suggests that the next phase of US crypto regulation may rely less on surprise lawsuits and more on rulemaking, guidance, and negotiated standards.