OpenSea pledges $5m for legal fees of NFT creators facing SEC scrutiny.
Key Takeaways
- SEC issues Wells notice to OpenSea, claiming NFTs are securities.
- OpenSea pledges $5 million to support NFT creators facing SEC scrutiny.
Non-fungible token (NFT) marketplace OpenSea has received a Wells notice from the US Securities and Exchange Commission (SEC) threatening legal action over the classification of NFTs as securities.
OpenSea’s CEO Devin Finzer shared on X that the company is shocked by SEC’s “sweeping move against creators and artists” and vowed to fight the potential lawsuit.
Despite recognizing that the SEC’s approach to regulating the market through enforcement is no novelty, mentioning the regulator’s actions against crypto companies such as Coinbase, Uniswap, and Kraken, Finzer highlighted that considering NFTs securities is an “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,” he added.
Finzer also shared that OpenSea considers NFTs to be fundamentally creative goods, including art, collectibles, and video game items, and should not be regulated like financial securities.
Moreover, the NFT marketplace CEO briefly cites how digital collectibles registered on blockchain have an impact on different industries’ professionals, such as indie game developers and student artists.
“It would be a terrible outcome if creators stopped making digital art because of regulatory saber-rattling,” stated Finzer.
In response to the SEC’s threat, OpenSea has pledged $5 million to help cover legal fees for NFT creators and developers who receive Wells notices. The company aims to support innovation in the NFT space “without fear of regulatory repercussions.”
Finzer concluded by saying that he hopes “SEC will come to its senses sooner rather than later,” claiming that OpenSea will “stand up and fight for our industry.”