OpenSea gets Wells Notice from SEC

The US Securities and Exchange Commission has issued a Wells Notice to OpenSea, the largest NFT marketplace.
OpenSea co-founder Devin Finzer says the NFT platform will fight the SEC’s lawsuit

OpenSea said in a blog post on Aug. 28 that the SEC’s Wells Notice indicates the regulator – widely criticised for is regulation by enforcement action in the crypto space, is considering a lawsuit against the NFT platform.

The SEC’s lawsuit against OpenSea will join a host of others, including against Uniswap, Robinhood and the crypto exchanges Kraken, Binance and Coinbase. SEC also charged Abra this week for its Earn program.

SEC into uncharted waters, OpenSea says

While the SEC has in recent months ramped regulatory crackdown on cryptocurrencies, OpenSea says the potential lawsuit against it over allegations of “collectibles, digital art, game items” being securities is a new low.

“By targeting NFTs, the SEC is diving into new, uncharted waters, with potentially harmful consequences for consumers, creators, and entrepreneurs alike,” OpenSea wrote in a blog post.

Devin Finzer, the co-founder and CEO of OpenSea, shared a similar reaction via X. According to Finzer, the SEC’s move is shocking. However, the platform is prepared to “stand up and fight.”

OpenSea has received a Wells notice from the SEC threatening to sue us because they believe NFTs on our platform are securities.

We’re shocked the SEC would make such a sweeping move against creators and artists. But we’re ready to stand up and fight.

Cryptocurrencies have long…

— Devin Finzer (dfinzer.eth) (@dfinzer) August 28, 2024

OpenSea also asserts that non-fungible tokens are fundamentally creative goods. As digital art or collectibles cannot be regulated in the same way as collateralized debt obligations.

“In addition to standing our own ground, we’re pledging $5M to help cover legal fees for NFT creators and devs that receive a Wells notice. Every creator, big or small, should be able to innovate without fear,” Finzer said.