- OpenSea founder Devin Finzer disclosed that the company received a Wells notice from the SEC.
- The notice states that the SEC seeks legal action against OpenSea, claiming that NFTs sold on its platform are securities.
- Crypto community members blasted the SEC for claiming that NFTs are securities.
OpenSea revealed on Wednesday that it has been hit with a Wells notice from the Securities & Exchange Commission (SEC). The company alleged that the regulator claimed the non-fungible tokens (NFTs) on its platform are securities. The report has led to an uproar from crypto community members who have shown concerns about the SEC's crackdown approach to the crypto industry in recent months.
OpenSea joins list of crypto companies slammed with Wells notice
NFT marketplace OpenSea revealed on Wednesday that it received a Wells notice from the SEC regarding the sale of NFTs on its platform. The company's CEO, Devin Finzer, initially announced the development on the X platform, indicating that the notice came as a shock to the company.
A Wells notice is a document indicating that the SEC has completed investigating a company and intends to take enforcement action. It also allows the accused to respond to the regulator's claims before an enforcement action is taken.
Devin disclosed that the notice suggests the SEC views NFTs on its platform as securities and states the company's disposition to "stand up and fight." He buttresses that the SEC's probe into the NFT community is "a move into uncharted territory," and could affect innovations at a larger scale by putting artists in danger.
"It would be a terrible outcome if creators stopped making digital art because of regulatory saber-rattling," Devin added.
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…
In line with their resolve to fight, OpenSea pledged to commit $5 million as legal support for NFT creators and developers who may encounter a Wells notice during the process.
Crypto community members are not silent on the issue, as many have expressed displeasure towards the SEC's claim that NFTs are securities. Some also allege that this is a political agenda from the SEC, citing that Donald Trump unveiled his NFT cards only yesterday. Other key industry voices also added their views on the SEC's action.
Brian Quintenz, Global Head of Policy at a16z, posted:
"News of OpenSea receiving a Wells Notice shows plain and simple that the current SEC's crusade against the crypto industry continues unabated."
Nick Ducoff, Head of Institutional Growth at the Solana Foundation, also added:
"As a securities lawyer, I'm of the opinion the SEC shouldn't have sent OpenSea a Wells notice. As a stoic, I'm of the opinion OpenSea shouldn't be shocked that the SEC did."
Uniswap Labs CEO Hayden Adams further added:
"In crypto an SEC Wells notice means you're a legit company building an important product in the US. SEC are clowns taking the idiotic stance that digital art magically transforms into a security when it's put on a blockchain."
Meanwhile, OpenSea has experienced a steady decline in revenue since the NFT craze in 2021. Revenue dropped from $365 million in 2021 to approximately $171 million in Q2 of 2024, reflecting less activity from creators.
Additionally, its trading volumes hit record lows last year, dropping from $14 billion in 2021 to around $49 million in October 2023.
Open Sea's Well notice places it among other crypto companies that have recently faced legal actions from the SEC, including Kraken, Uniswap, Coinbase, Robinhood and Binance.
SEC Chair Gary Gensler has repeatedly suggested that much of the crypto industry falls under his agency's purview. However, the Commodity & Futures Trading Commission (CFTC) has argued otherwise, stating that several key cryptocurrencies are commodities.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Is Altcoin Season here as Bitcoin reaches a new all-time high?
Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.
Shanghai court confirms legal recognition of crypto ownership
A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.
BTC hits an all-time high above $97,850, inches away from the $100K mark
Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: New high of $100K or correction to $78K?
Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.