Commercial-Value Limitation on Confidential Information as “Property” Under § 1343:
Commentary on United States v. Chastain, No. 23-7038 (2d Cir. July 31 2025)

1. Introduction

United States v. Chastain is the Second Circuit’s first published opinion to squarely hold that confidential business information is “property” for purposes of the federal wire-fraud statute only if it possesses commercial value to the putative victim. The ruling vacates the conviction of Nathaniel Chastain—former Head of Product at OpenSea—for wire fraud and money laundering based on his clandestine trading in non-fungible tokens (“NFTs”). The panel (Judge Menashi writing; Judges Wesley concurring and Cabranes dissenting in relevant part) concludes that the district court’s jury instructions erroneously permitted conviction where Chastain merely misused information that OpenSea treated as confidential yet lacked any real economic significance to the platform.

The decision crystallises two key issues:

• Whether §1343 reaches intangible business interests detached from “traditional” property rights; and
• The permissible breadth of “scheme to defraud” instructions after Ciminelli (2023) and Kelly (2020).

2. Summary of the Judgment

The panel vacates Chastain’s convictions because:

1. The jury was told it could deem the “featured NFT” list to be OpenSea’s property even without proof of commercial value (property error);
2. The jury was told it could find a “scheme to defraud” based merely on conduct that “departed from traditional notions of fundamental honesty and fair play,” a formulation the panel finds overbroad post-Ciminelli (scheme error); and
3. Those errors were not harmless given the mixed evidentiary record and a jury note revealing uncertainty.

Evidentiary challenges (limits on employee testimony, exclusion of a contract red-line, and exclusion of a founder’s crypto trading) are affirmed, but the convictions are vacated and remanded.

3. Analysis

3.1 Precedents Cited and Their Influence

• Carpenter v. United States, 484 U.S. 19 (1987) – Recognised pre-publication news as property; panel reads Carpenter as implicitly requiring that such information have commercial value, because the Court analogised it to trade secrets and “stock-in-trade.”
• Ciminelli v. United States, 598 U.S. 306 (2023) – Rejected the “right-to-control” theory; emphasised that § 1343 targets only traditional property interests. Chastain leverages Ciminelli to exclude mere “intangible interests unconnected to property” from § 1343.
• Cleveland v. United States, 531 U.S. 12 (2000) – Licence application not property; quoted to show statutes “protect property rights only.”
• United States v. Grossman, 843 F.2d 78 (2d Cir. 1988) – Upheld wire-fraud conviction for stealing a client’s confidential info; panel distinguishes Grossman because there the info’s secrecy protected the firm’s revenue.
• Skilling v. United States, 561 U.S. 358 (2010) & Kelly v. United States, 590 U.S. 391 (2020) – Cited to reject revivified “honest services” or morality-based theories sneaking back into wire fraud.
• Kousisis v. United States, 145 S. Ct. 1382 (2025) – Confirmed that economic loss is not an element, but goal must be to obtain property; panel reads it as consistent with the need for an underlying property interest.

3.2 Court’s Legal Reasoning

The opinion proceeds in three logical steps:

1. Define “property.” Drawing heavily on Ciminelli, the court states that § 1343 protects only interests that were “long recognised as property” in 1952 when wire fraud was enacted. Because trade-secret jurisprudence always tied protection to commercial value, mere secrecy without value is insufficient.
2. Dissect the jury instructions. a) The charge allowed conviction where information was kept confidential but valueless – contrary to the new commercial-value rule.
   b) The “traditional honesty and fair play” language resurrected a pre-McNally honest-services theory and thus permitted conviction for unethical, but non-property, conduct.
3. Harmless-error analysis. Evidence that featured-NFT choices mattered little to OpenSea’s economics (no fee differential, no internal monetisation) and the jury’s note questioning confidentiality render the errors prejudicial.

3.3 Impact on Future Litigation

• Narrowing of wire-fraud prosecutions. Prosecutors must now show a concrete economic interest in the confidentiality of information—e.g., a lost-revenue or competitive advantage nexus—before charging misappropriation under § 1343.
• Compliance and corporate policies. Companies seeking to rely on federal fraud statutes for protection will need to document commercial relevance (not mere desirability) of any information they label “confidential.”
• Digital-asset and platform cases. The opinion is especially salient for crypto/NFT platforms where business models differ from traditional broker-dealer paradigms; selective-listing information may fail the commercial-value test.
• Jury-instruction templates. Model charges must excise “departure from honesty” language and explicitly require property or money as the object of fraud.
• Split with other circuits. Judge Cabranes’s dissent forecasts possible Supreme Court review. If other circuits follow Carpenter/Grossman alone, the value-requirement could create a circuit split.

4. Complex Concepts Simplified

4.1 “Property” in Fraud Statutes

Under § 1343, you are guilty only if you sought someone else’s money or property. “Tangible” property is physical stuff; “intangible” property includes rights with economic worth—e.g., patents, trade secrets, contractual payments. The Second Circuit now says confidential information sits in that second bucket only if it affects the owner’s bottom line.

4.2 “Trade Secret” vs. Mere Confidentiality

All trade secrets are confidential, but not all confidential items are trade secrets. A trade secret (Restatement §39) must:

• Be secret (not generally known);
• Have economic value from that secrecy; and
• Be subject to reasonable steps to keep it secret.

Chastain says OpenSea had secrecy steps (NDA) but no economic value; therefore the information was not “property.”

4.3 “Scheme to Defraud” Post-Ciminelli

The Supreme Court has steadily confined “fraud” to obtaining someone’s property through deceit. Moral wickedness, regulatory non-compliance, or bad-faith policy decisions are not federal fraud unless property is targeted.

5. Conclusion – Key Takeaways

• The Second Circuit establishes a commercial-value prerequisite for treating confidential information as property under the wire-fraud statute.
• Jury instructions invoking broad morality, “honesty,” or fiduciary-like notions risk reversible error after Ciminelli.
• Evidentiary discretion remains with trial courts, but the sufficiency of property-related proof will be scrutinised de novo.
• United States v. Chastain is poised to reshape white-collar prosecutions in the Second Circuit, particularly in tech-platform contexts, and may invite Supreme Court clarification given Judge Cabranes’s pointed dissent.