Nathaniel Chastain, who worked for OpenSea, was found guilty of wire fraud and money laundering by a jury in federal court in Manhattan Wednesday following a week-long trial and two days of deliberations.

Unlike most traditional insider-trading cases, which are centered around securities-fraud charges for misappropriating non-public information such as unreleased earnings reports, Chastain was charged with wire fraud. That allowed prosecutors to skirt the issue of whether non-fungible tokens are legally classified as a security, a hotly debated topic in the world of digital assets. 

The verdict is likely to encourage further use of the strategy by prosecutors as a tool to ferret out fraud in nontraditional markets while regulations for digital assets are still being crafted.

Chastain, 32, was responsible for selecting which NFTs would be highlighted on OpenSea’s home page, which usually led to an immediate spike in the price of the assets. 

Prosecutors said that while OpenSea would keep the identity of featured tokens secret until they appeared on its home page, Chastain bought dozens of them beforehand and then sold them immediately afterward for as much as five times the purchase price, violating his duty to keep the information confidential.

The government alleged Chastain made more than $57,000 in profit from the scheme based on the value of ethereum tokens he collected from the NFT sales. Chastain argues that he never converted the proceeds to dollars and therefore never realized any gain. At Wednesday’s trading price at 4:45 pm, the 19 ethereum Chastain allegedly told his girlfriend he made off the sales would be worth about $35,000.

Chastain was asked to resign in September 2021 after the community began questioning whether he was front-running sales and the company instituted policies barring employees from buying or selling featured NFTs while they were being highlighted on the home page. He was arrested in June 2022.

He faces as much as 20 years in prison on each count for his conviction, though he’s likely to get far less than that. Sentencing is set for Aug. 22.

Chastain had argued NFTs aren’t securities or commodities and therefore aren’t subject to the government’s theory — and that what he took isn’t misappropriated property, as required by the law, because it had no economic or market value. He also contended that he didn’t commit money laundering because the transactions were made on a public blockchain.

A group of more than 300 defense attorneys filed a letter in support of Chastain’s request to throw out the indictment, saying that a finding that confidential business information is property would expand how fraud is prosecuted and and “criminalize a broad swath of conduct.”

The government used a similar approach in the first insider-trading case involving cryptocurrency. Ishan Wahi, a former Coinbase Global Inc. manager, pleaded guilty in February to two counts of conspiracy to commit wire fraud for trading on confidential information he learned about when the exchange was going to list new tokens.

Wahi faces as long as 20 years in prison on each count when he’s sentenced later this month, although he agreed to federal guidelines that call for him to serve 36 to 47 months behind bars as part of his plea deal.

Wahi — who is being represented by Chastain’s lawyer, David Miller — has asked the court to sentence him to 10 months or less in prison, saying he is a “man of outstanding character who crossed the line.”

“Ishan’s name has been associated with the events of this case, and he will forever be a Google search away from being known as the first insider to be convicted in a ‘cryptocurrency insider trading’ case,” Miller wrote in an April 26 memo to the court.