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The U.S. Securities and Exchange Commission sent OpenSea a Wells notice on Wednesday, suggesting that the federal agency plans to pursue pending enforcement action. OpenSea is a nonfungible token marketplace.
Co-founder and CEO of OpenSea Devin Finzer said on XOpenSea has received a Wells notice from the SEC threatening to sue us because they believe NFTs on our platform are securities.
— Devin Finzer (dfinzer.eth) (@dfinzer) August 28, 2024
We're shocked the SEC would make such a sweeping move against creators and artists. But we're ready to stand up and fight.
Cryptocurrencies have long…
The SEC claimed in the alert that NFTs sold on the platform would be considered unregistered securities. A Wells notice is a letter sent to the subject of an inquiry prior to a decision being made informing them that the SEC believes they violated the law.
We’re shocked the SEC would make such a sweeping move against creators and artists,” Finzer said. “But we’re ready to stand up and fight.”
A type of blockchain-based crypto-asset known as nonfungible tokens provides cryptographic evidence of ownership for various digital assets, such as virtual concert tickets, digital art, collectibles, and video game goods. One well-known platform where NFTs may be created, purchased, sold, and traded is OpenSea. As the SEC steps up enforcement, it joins an expanding list of cryptocurrency-asset platforms it has targeted.
The centralized cryptocurrency exchanges Kraken, Binance Holdings Ltd., and Coinbase Global Inc. have been the focus of the SEC. The last settled its legal dispute with the agency by paying $30 million in penalties. Additionally, the SEC addressed two notices to Uniswap Labs, a decentralized finance system, and Robinhood Markets Inc., a retail trading platform, about the trading of cryptocurrencies on their platform.
Finzer said that the SEC has been harshly policing the sector,
This is a move into uncharted territory.By targeting NFTs, the SEC would stifle innovation on an even broader scale: hundreds of thousands of online artists and creatives are at risk, and many do not have the resources to defend themselves,” Finzer said. “We should not regulate digital art in the same way we regulate collateralized debt obligations.”
Finzer also said that OpenSea would be pledging $5 million to pay the legal expenses of NFT founders and developers served with a Wells notice on top of their legal response to the SEC.
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