OpenSea Receives Wells Notice from SEC
OpenSea CEO Devin Finzer announced that the firm received a Wells Notice from the US Securities and Exchange Commission (SEC) because the regulator considers the NFTs on its platform securities.
In an Aug. 28 statement, Finzer expressed surprise at the SEC’s broad action against creators and artists. He stated:
“We’re shocked the SEC would make such a sweeping move against creators and artists. But we’re ready to stand up and fight.”
$5 Million Fund
Finzer emphasized that the SEC’s move ventures into uncharted territory, potentially stifling innovation and jeopardizing the livelihoods of online artists and creators. OpenSea is pledging $5 million to help cover legal fees for NFT creators and developers facing Wells Notices from the SEC.
He argued that NFTs should not be regulated like financial instruments and that artists should not be discouraged from creating digital art due to regulatory threats.
Wells Notice Implications
The Wells Notice issued to OpenSea signifies a regulatory crackdown on digital assets in the US. The outcome of this case could set a precedent for how NFTs are treated under US securities law.
Regulatory notices have been issued to other crypto-related firms as well, but OpenSea is the first NFT-related company to receive one.
The notice allows OpenSea to respond before charges are formally proposed, giving them a chance to address the SEC’s concerns.