The United States Securities and Exchange Commission issued a Wells notice to OpenSea on Aug. 28, stating that the non-fungible token (NFT) exchange had served as a marketplace for unregistered securities.
OpenSea CEO Devin Finzer said he was “shocked” by the SEC action.
The crypto community protested the notice, which serves as a warning that the SEC may take enforcement action against the exchange.
Finzer said that OpenSea is prepared to “stand up and fight,” signaling a potential intention to take the case to court rather than seeking a settlement.
Finzer criticized the SEC for pursuing “regulation by enforcement” because it has sued several major crypto companies for operating as unregistered securities platforms.
However, Finzer said that targeting NFTs is “uncharted territory” for the SEC and believes that “hundreds of thousands of online artists and creatives are at risk.”
NFT collections and marketplaces under scrutiny — not artists
But are artists and creatives the SEC’s real target?
Grant Gulovsen, a US lawyer who works with the tech and crypto sectors, told Cointelegraph that he suspects the main complaint “will be targeted to a limited set of NFT collections that were actively promoted by the issuers as good investments and that those promotional statements were repeated by OpenSea.”
He believes the SEC will “unlikely involve people who were just releasing art.”
The SEC has already brought NFT-related cases against entertainment firm Impact Theory and the animated series Stoner Cats. Gulovsen explained that in both cases, it was critical to how the NFTs were promoted and marketed to potential purchasers as a good investment opportunity or a project where the team was essential to the future value of the NFTs.
Andres Munoz, a litigation partner and attorney from Romano Law, told Cointelegraph that if any NFT marketing suggests that buyers will profit from the NFT’s future value due to the efforts of the artist, marketplace or other parties, it might meet the…
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