The crypto community has backed the leading NFT marketplace, OpenSea, the latest target in the U.S. Securities and Exchange Commission (SEC)’s ongoing regulatory offensive against the sector.
Notably, on Thursday, August 28, OpenSea received a Wells Notice from the SEC signaling the possibility of forthcoming legal action. This notice, typically issued before formal charges are filed, alleges that the NFTs traded on OpenSea may qualify as securities.
In response, OpenSea firmly challenged the SEC’s stance, declaring its readiness to legally counter the agency’s allegations.
“OpenSea has received a Wells notice from the SEC. We’re shocked that the SEC would make a move that threatens creators and artists, and we’re ready to stand up and fight for our industry,” wrote OpenSea.
In a tweet, CEO Devin Finzer further expressed his shock, emphasizing that the SEC’s action threatens their platform and the broader community of creators and artists.
“We’re shocked the SEC would make such a sweeping move against creators and artists. We’re ready to stand up and fight,” Finzer declared. He criticized the SEC’s approach, likening it to a form of “regulation by enforcement” that posed an even greater danger to the crypto sector.
“Cryptocurrencies have long been in the crosshairs of the SEC, and [crypto] companies have been fighting against the SEC’s single-track approach of “regulation by enforcement.” But this is a move into uncharted territory. By targeting NFTs, the SEC would stifle innovation on an even broader scale.” He added.
Notably, the SEC’s stance suggesting that NFTs are securities has been condemned by various figures in the crypto space. Kraken co-founder Jesse Powell called the move “absurd,” attributing it to a strategy of distraction and resource depletion considering the SEC’s past failures in lawsuits alleging crypto-assets like XRP are securities. Powell further criticized the SEC for targeting American companies and suggested a need for an investigation into what he described as “treasonous acts of sabotage.”
“But, why is it always American companies? It’s time for a serious investigation into these treasonous acts of sabotage.” He stated.
On the other hand, Tyler Winklevoss, CEO of Gemini, echoed concerns about the implications for digital artists in the Web3 space, highlighting that the SEC’s focus on NFTs is a troubling development for the digital art community.
Additionally, Adam Cochran, founder of Cinneamhain Ventures, labeled the SEC’s actions as a desperate maneuver by SEC Chair Gary Gensler. In a tweet, the pundit argued that the regulatory body’s timing and focus are questionable, suggesting that if NFTs were indeed a concern, the SEC should have addressed these issues earlier when the market was booming, rather than now when the sector is less active.
The SEC’s actions are part of a broader regulatory crackdown that has already seen several high-profile lawsuits against crypto companies like Coinbase, Kraken, and Binance in 2023. The agency has targeted these firms for allegedly distributing unregistered securities, intensifying scrutiny on the burgeoning sector.
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