NFT marketplace OpenSea received a Wells Notice from the U.S. Securities and Exchange Commission (SEC), in which the regulator claims that non-fungible tokens (NFT) traded on the platform may qualify as unregistered securities.
The U.S. Securities and Exchange Commission (SEC) sent a Wells Notice to OpenSea, a trading platform for non-fungible tokens. According to Devin Finzer, CEO of the marketplace, the regulator accuses the platform of violating securities laws.
The SEC believes that some NFTs traded on OpenSea may qualify as unregistered securities. Following the investigation, the regulator is prepared to file a lawsuit against the platform.
Finzer assured that the company is ready to fight any possible sanctions. He emphasized that the SEC’s actions could set a precedent that would negatively impact the entire NFT industry, putting hundreds of thousands of artists and creators at risk, many of whom lack the resources to defend themselves in court. Therefore, OpenSea will create a special fund and allocate $5 million for the legal defense of NFT creators in the face of the SEC’s attacks.
Many in the crypto industry criticized the SEC’s actions. Ji Kim, General Counsel of the Crypto Council for Innovation (CCI), said that it’s utterly ridiculous for the SEC to label the NFT marketplace as a securities exchange, arguing that it’s legally incorrect. Katherine Minarik, CLO at Uniswap Labs, also criticized the regulator’s approach, asserting that there’s no law classifying collectibles as securities, so NFTs can’t be categorized as such. She also expressed deep regret that the regulator continues to waste resources meant for investor protection on pointless litigation.
Some U.S. officials also opposed the SEC’s actions. Wiley Nickel, Congressman from North Carolina, said that SEC Chair Gary Gensler should stop regulating through enforcement and work with Congress to create clear and fair rules that support innovation and preserve jobs in the United States. By the way, Gensler was named by crypto industry representatives as the driving force behind the latest threats against the crypto community.
Earlier, the SEC issued Wells Notices to Uniswap, Robinhood, and Paxos and filed lawsuits against Binance, Coinbase, Bittrex, and Kraken.
