A recent X post by Ripple CLO Stuary Alderoty has caught the eyes of crypto market enthusiasts. In an X post, Alderoty highlighted key reasons that could result in another defeat for the US SEC, if the agency decides to sue OpenSea and considers NFTs as securities. The agency, after issuing a wells notice against the NFT marketplace, has faced heavy backlash recently, with this recent development further adding to the discussions.
Ripple CLO Cites Historical Precedent Against US SEC
The latest comment from the Ripple CLO revolves around a 1976 ruling where the US SEC decided that art galleries promoting or selling artworks, even with investment motives, do not have to register with the agency as securities dealers. He noted that this precedent could also apply to the OpenSea case, where non-fungible tokens (NFTs) are traded similarly to art rather than financial securities.
In a recent X post, Stuart Alderoty shared a ruling involving Art Appraisers of America. The ruling showed that it was exempt from SEC registration despite selling lithographs with potential investment value. The SEC’s ruling clarified that art sales, even when linked to investment potential, do not come under securities law if galleries do not make a guarantee about resale value or create a market for the artwork.
Meanwhile, this argument, as highlighted by the Ripple CLO, aligns closely with OpenSea’s business model, which focuses on digital art rather than investment vehicles. In addition, this stance could challenge the US SEC’s approach if it pursues litigation against OpenSea, suggesting that NFTs, like traditional art, should not automatically be classified as securities.
SEC Faces Criticism For Its Move Against OpenSea
OpenSea recently said that it has received a Wells Notice from the US SEC. The SEC claimed that some of the NFTs traded on the platform might qualify as securities, which would require OpenSea to comply with stricter regulations.
However, CEO Devin Finzer expressed surprise and disappointment, saying that SEC’s approach unfairly targets artists and creators who use the platform. This regulatory move has ignited broader criticism, with notable voices in the crypto and political spheres speaking out.
For context, US Congressman Wiley Nickel condemned the SEC’s aggressive “regulation by enforcement” strategy, calling it an overreach that undermines trust and transparency in the regulatory process. Nickel urged the agency to collaborate with Congress to develop fair regulations that encourage innovation without stifling the burgeoning digital asset market.
In addition, billionaire Mark Cuban criticized SEC Chair Gary Gensler, accusing him of mishandling regulatory oversight. Notably, the recent comment from Stuart Alderoty and the heavy backlash reflects the growing frustration with the agency’s approach to digital assets.
Rupam Roy
Rupam, a seasoned professional with 3 years in the financial market, has honed his skills as a meticulous research analyst and insightful journalist. He finds joy in exploring the dynamic nuances of the financial landscape. Currently working as a sub-editor at Coingape, Rupam’s expertise goes beyond conventional boundaries. His contributions encompass breaking stories, delving into AI-related developments, providing real-time crypto market updates, and presenting insightful economic news. Rupam’s journey is marked by a passion for unraveling the intricacies of finance and delivering impactful stories that resonate with a diverse audience.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
✓ Share: