KEY POINTS
- Finzer said the SEC's move will stifle innovation on a much bigger scale
- Jonathan Mann noted that the SEC's attempt to regulate NFTs is the reason why he is suing the regulator
- Some well-followed NFT enthusiasts and users said OpenSea may have deserved it
The cryptocurrency community has once again erupted after the CEO of popular non-fungible token (NFT) marketplace OpenSea revealed Wednesday that the company received a Wells notice from the U.S. Securities and Exchange Commission.
SEC Says NFTs are Securities: OpenSea CEO
Devin Finzer said the SEC has threatened to sue OpenSea "because they believe NFTs on our platform are securities." He said the Wells notice, a formal notice from the Wall Street regulator informing the company in question that it is planning enforcement actions, as a "sweeping move against creators and artists."
Finzer noted how a host of cryptocurrency companies have already been battling with the SEC over the latter's "regulation by enforcement" approach to digital assets, but he said the regulatory agency has now stepped over a red line.
OpenSea has received a Wells notice from the SEC threatening to sue us because they believe NFTs on our platform are securities.
— Devin Finzer (dfinzer.eth) (@dfinzer) August 28, 2024
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…
Putting Creatives at Risk
"This is a move into uncharted territory. By targeting NFTs, the SEC would stifle innovation on an even broader scale," Finzer said. He added that digital art should not be regulated in the same way as collateralized debt obligations.
He added that the digital art industry will significantly suffer a huge blow and may force digital artists to stop creating "because of regulatory saber-rattling." He vowed that OpenSea will "fight for our industry."
Revelation Draws Outrage
Many crypto leaders, enthusiasts and users have expressed frustration over the latest development, urging OpenSea to fight back.
Thinking Crypto Podcast founder Tony Edward said OpenSea should lodge a legal complaint against the SEC, and the industry will support the platform.
NFT leader @VonDoom said SEC Chair Gary Gensler "should be fired" after the regulator's latest Wells notice issuance.
Jonathan Mann, more popularly known as Song a Day Mann, said "this is exactly why we are suing the g****n SEC." Mann and another NFT artist sued the SEC late last month, asking the court to provide clarity on whether NFTs should be placed under the SEC's regulatory pool.
Emmett Shear, formerly the interim CEO of OpenAI, said it was "ridiculous" to claim that NFTs in general are securities, and Web3 enthusiasts Chris Jourdan said he appreciates that OpenSea is putting up a fight "on behalf of the entire space."
Ridiculous to claim NFTs in general are securities. Are paintings securities now? Beanie Babies? Is the SEC coming after eBay next? Seriously silly.
— Emmett Shear (@eshear) August 28, 2024
You could surely make an NFT that was a security, but you can make slips of paper into securities too (“stock certificates”).
we'll all be rooting for OpenSea
— Captain Zwingli 🍌🎙️ (@ChrisJourdan) August 28, 2024
appreciate you fighting on behalf of the entire space 🫡
Did OpenSea Deserve It?
While many came to OpenSea's defense, many others argued that the marketplace may have deserved the Wells notice, with some saying the platform only started paying attention to artists after the SEC moved.
"I'm relieved to see the regulatory authorities taking action against this evil company," said crypto enthusiast @realpandapunks, who, in November, wrote that OpenSea "is an industry cancer."
Finally. 🥳
— PandaPunk (@realpandapunks) August 28, 2024
I’m so relieved to see the regulatory authorities taking action against this evil company. Opensea has harmed users in multiple ways; please read my pinned tweet for details!https://t.co/AZ3jHxAA4D
For well-followed @basedkarbon, OpenSea should have put in the work to make the platform decentralized. "Instead you promoted hot trash on your homepage, censored creators, gatekept verification badges, build out tooling to promote garbage mints," he said, adding that the marketplace has made it hard for the community to support its fight.
You should've worked to decentralize your platform
— karbon 🐺🦊 (@basedkarbon) August 28, 2024
Instead you promoted hot trash on your homepage, censored creators, gatekept verification badges, build out tooling to promote garbage mints
Still hope you win against SEC but ffs you not making it easy for us to root for you
NFT artist @dark0eth said "it took the SEC to get involved for OpenSea to care about artists."
SEC's Contentious History with Crypto, DeFi
Under Gensler, the SEC has issued multiple Wells notices across a wide range of blockchain and DeFi companies, including decentralized on-chain marketplace Uniswap, which received a Wells notice in April.
The regulator has also been cracking down on huge crypto firms such as Ripple and cryptocurrency exchange giant Coinbase. The said companies have lodged challenges against the SEC as they stand ground in their stance that their products and services are not under the agency's jurisdiction due to the lack of regulatory clarity.
