US SEC threatens to sue NFT marketplace OpenSea, CEO says
The U.S. 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 notice from the SEC threatening to sue us because they believe NFTs on our platform are securities,” said Devin Finzer, co-founder and CEO of OpenSea.
A Wells notice is a formal statement that SEC staff intends to recommend enforcement action.
The SEC is not commenting on whether or not a potential investigation exists, a spokesperson for the regulator said in a statement to Reuters.
The SEC and the crypto industry have been at odds in recent years due to their differing positions on whether crypto assets should be classified as securities and regulated in the same way.
“We are shocked that the SEC would take such a drastic step against creators and artists. But we are ready to stand up and fight,” Finzer added.
Crypto companies are accusing the regulator of overreaching and violating its jurisdiction, while the SEC claims the industry is flouting securities laws meant to protect investors and other market participants.
“While NFTs are not normally considered securities, I believe the SEC is looking into how they have been treated and traded and whether they have the form or feel of an investment contract,” said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
“Attitudes towards NFTs already took a big hit during the last crypto crash and are struggling to recover,” he added.
Leading crypto companies, including exchange Coinbase and retail trading app Robinhood, have repeatedly called for clearer regulations and new laws.
An NFT is a digital asset that exists on a blockchain, which 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
