Key Points
- OpenSea reportedly received a Wells Notice from the US SEC, accusing them of NFTs being securities.
- The platform pledges $5 million to help NFT creators and developers targeted by the SEC.
According to the latest reports shared via X by OpenSea co-founder and CEO, Devin Finzer, the platform received a Wells notice from the SEC, threatening to sue them. The regulator believes that the NFTs on the platform are securities.
A Wells notice is a letter that the US Securities and Exchange Commission (SEC) sends to people or firms at the conclusion of an investigation that states the regulator plans to bring an enforcement action against them.
The notice informs the people or the firm that the SEC concluded that they should be charged with violation of the securities law.
SEC Moves Into Uncharted Territory
In the X announcement, Finzer says that the team is shocked that the SEC would make such as sweeping move against creators and artists, but they are ready to stand up and fight.
Cryptos have long been under the SEC’s scrutiny, and key companies such as Coinbase, Uniswap, Robinhood, Kraken, and Consensys have been fighting against the regulator’s single-track approach of “regulation by enforcement.”
According to Finzer, this new move takes the SEC into uncharted territory, because by targeting NFTs, the regulator would stifle innovation on an even broader scale. Hundreds of thousands of online artists and creatives are now at risk, and many of them lack resources for defense.
NFTs are fundamentally creative goods including art, collectives, video game items, event tickets, domain names, and more.
OpenSea’s CEO notes that art should not regulated in the same way as collateralized debt obligations are regulated. He also highlighted that since building OpenSea, the team has heard various stories about how NFTs can affect people’s lives for the better.
Impact of NFTs on People’s Lives
NFTs can affect people’s lives in various ways including the following:
- Student artists finding full-time careers in selling their digital art.
- Indie game developers instantly enable open markets for their in-game items, without having to deal with building new marketplaces.
- Passionate collectors from all over the world join new communities centered around shared digital ownership.
According to the CEO of OpenSea, it would be terrible if creators stopped making digital art due to regulations. He also offered examples of musicians known on X as “16 years of song a day” and the conceptual artist Brian L. Frye, who are fearful that the sale of their art and music could be deemed as unregistered securities offerings.
OpenSea Pledges $5 Million to Help NFT Creators and Developers
OpenSea CEO also announced that besides standing their own ground, they are also pledging $5 million to help cover legal fees for NFT creators and developers who receive a Wells notice.
He also said that every creator, big or small, should be able to innovate without fear.
Finzer ended the post by saying that he hopes the SEC will come to its senses and listen with an open mind, but until then, they will stand and fight for the industry.
