US SEC Threatens to Sue NFT Marketplace OpenSea, CEO Devin Finzer Says

The SEC and the crypto industry have locked horns in recent years over their divergent views on whether crypto assets classify as securities.

By Reuters | Updated: 29 August 2024 14:35 IST

US SEC Threatens to Sue NFT Marketplace OpenSea, CEO Devin Finzer Says

Photo Credit: Reuters

Devin Finzer and Alex Atallah founded OpenSea in December 2017

Highlights

SEC allegedly believes NFTs on OpenSea are securities
The US SEC wish to deploy proper regulations over digital assets
The SEC has repeatedly locked horns with the crypto industry

The US Securities and Exchange Commission (SEC) has threatened to sue non-fungible tokens marketplace OpenSea, the company's CEO said in a post on social media platform X on Wednesday.

"OpenSea has received a Wells notice from the SEC threatening to sue us because they believe NFTs on our platform are securities," OpenSea co-founder and CEO Devin Finzer said.

A Wells notice is a formal declaration that SEC staff intend to recommend an enforcement action.

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The SEC does not comment on the existence or nonexistence of a possible investigation, a spokesperson for the securities regulator said in a statement to Reuters.

The SEC and the crypto industry have locked horns in recent years over their divergent views on whether crypto assets classify as securities and should be regulated similarly.

"We're shocked the SEC would make such a sweeping move against creators and artists. But we're ready to stand up and fight," Finzer added.

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Crypto companies have accused the regulator of overreach and violating its jurisdiction, while the SEC has alleged the industry is flouting securities laws that are designed to protect investors and other market participants.

"Although NFTs are not normally considered securities I suppose the SEC might be looking at how they were treated and traded and if they had the form or feel of an investment contract," said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.

"Attitudes towards NFTs were already severely hit in the last crypto crash and are having a hard time rebounding," he added.

Prominent crypto firms, including exchange Coinbase and retail trading app Robinhood, have repeatedly called for clearer regulation 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 asset's authenticity and ownership. NFTs, which became popular in 2017, have a unique digital signature and cannot be reproduced.

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