- The SEC issued a Wells notice to NFT marketplace OpenSea, alleging that the NFTs sold on its platform are securities.
- OpenSea CEO Devin Finzer expressed shock at the SEC’s move and stated that the company is ready to fight, calling it a move into uncharted territory that could stifle innovation for online artists and creators.
- OpenSea has pledged $5 million to cover legal fees for NFT creators and developers who receive a Wells notice from the SEC.
The popular NFT marketplace OpenSea is the latest crypto company to be targeted by the SEC.
OpenSea Receives Wells Notice Alleging NFTs Are Securities
On Wednesday, OpenSea CEO Devin Finzer announced that the company had received a Wells notice from the SEC. A Wells notice is typically one of the final steps before the SEC files formal charges against a company.
According to Finzer, the Wells notice alleges that the NFTs sold on OpenSea’s platform are unregistered securities. OpenSea allows users to mint, buy, and sell NFTs.
Finzer said OpenSea was “shocked” by the SEC’s move and is ready to fight back. He called it a “sweepingly broad” action that could impact hundreds of thousands of artists and creators.
OpenSea Pledges Legal Funds for NFT Creators
In his announcement, Finzer said OpenSea has pledged $5 million to cover legal fees for NFT creators and developers who receive a Wells notice from the SEC.
He believes classifying NFTs as securities would be a misinterpretation of the law. Finzer expressed confidence that OpenSea operates legally and its users aren’t trading securities.
SEC Crackdown on Crypto Industry
The potential charges against OpenSea are part of a broader crackdown on the crypto industry by SEC Chair Gary Gensler.
So far this year, the SEC has taken action against numerous crypto and DeFi companies including ShapeShift, TradeStation, Uniswap, and the Ethereum Foundation.
Centralized exchanges like Coinbase, Kraken, Binance, and Robinhood have also faced lawsuits or investigations. Some crypto companies are now considering leaving the U.S. altogether due to the uncertain regulatory environment.
Pushback Against SEC’s Stance on Crypto
However, many in the crypto industry argue the recent legal battles have not provided the regulatory clarity they have sought for years.
Some believe the SEC is overstepping its authority and stifling innovation in crypto. Republican presidential nominee Donald Trump has pledged to fire Chair Gensler if elected, though the president cannot directly remove appointed commissioners.
The outcome of OpenSea’s tussle with the SEC could have major implications for the future of NFTs. For now, the regulatory uncertainty continues in crypto.
