The US Securities and Exchange Commission (SEC) has threatened to sue non-fungible token marketplace OpenSea, the company’s CEO said in a post on social media platform X on Wednesday.
“OpenSea has received a Wells Notice from the SEC threatening litigation because they believe the NFTs on our platform are securities,” said Devin Finzer, co-founder and CEO of OpenSea.
A Wells Notice is a formal statement that an SEC staff member intends to recommend an enforcement action.
A spokesman for the Securities and Exchange Commission (SEC) told Reuters that the SEC does not comment on the existence or non-existence of a possible investigation.
In recent years, the SEC and the crypto industry have clashed over differing views on whether crypto assets should be classified as securities and regulated in a similar manner.
“We are shocked that the SEC is taking such a sweeping step against creators and artists. But we are ready to stand up and fight,” Finzer added.
Crypto companies have accused the regulator of overreach and violating its jurisdiction. The SEC, in turn, claims that the industry is ignoring securities laws that are supposed to protect investors and other market participants.
“Although NFTs are not typically considered securities, I expect the SEC will look at how they were treated and traded and whether they had the form or character of an investment contract,” said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
“Attitudes towards NFTs have already been severely impacted by the last crypto crash and are having great difficulty recovering from it,” he added.
Well-known crypto companies, including the exchange Coinbase and the trading app Robinhood, have repeatedly called for clearer regulations and new laws.
An NFT is a digital asset that exists on a blockchain that serves as a public ledger, allowing anyone to verify the authenticity and ownership of the asset. NFTs, which became popular in 2017, have a unique digital signature and cannot be reproduced.
© Thomson Reuters 2024
