TLDR
- Two users have joined forces in a lawsuit against OpenSea, asserting that NFTs sold through the platform breach securities laws.
- The SEC Wells Notice is a pivotal piece of evidence in the litigation against OpenSea.
- The plaintiffs argue that their NFTs, including those from the Bored Apes, are now defunct as they are deemed illegal unregistered securities.
- The lawsuit contends that OpenSea failed its users by allowing securities to be traded unchecked.
- Accusations have surfaced against OpenSea for profiting off fees from the trading of alleged securities.
A pair of OpenSea users have initiated a legal action against the NFT marketplace, claiming it deals in unregistered securities.
Filed in a Florida federal court, the lawsuit sharpens the focus on the debate regarding NFTs as securities.
Plaintiffs Anthony Shnayderman and Itai Bronshtein argue NFTs, including Bored Apes, from OpenSea are rendered worthless due to being 'illegal' securities.
The lawsuit points to OpenSea’s The plaintiffs spotlight OpenSea's recent Wells notice from the SEC as backing their claims.
A Wells notice denotes the SEC's intention of potential enforcement action post-investigation.
The claimants believe that the Wells notice could implicate OpenSea in the trade of unregistered securities.
The lawsuit draws parallels with recent SEC actions against other NFT ventures like Stoner Cats 2 and Impact Theory.
News of @Opensea Receiving a Wells notice signifies the SEC's relentless pursuit in the crypto realm, contrasting VP Harris's economic agenda announcement. pic.twitter.com/cafsHJ6DhU
— Brian Quintenz (@BrianQuintenz) August 28, 2024
Shnayderman and Bronshtein hold that the NFTs satisfy the Howey test, cementing their status as securities.
They allege OpenSea's NFT advertisements were misleading, coercing them into buying what they see as worthless securities.
The plaintiffs claim OpenSea did not fulfill its promise to safeguard the platform from unregistered securities.
OpenSea is accused of unjust profit by levying fees on potentially illicit security sales.
This lawsuit emerges amid a volatile NFT market, exemplified by a CryptoPunk's drastic price drop from $23.2 million to $3.9 million.
The case against OpenSea probes vital issues about NFT exchanges' duties and the legal footing of digital artifacts.
While OpenSea remains mum on the case, its outcome could redefine NFT trading and regulatory practices.
The ruling might clarify NFTs' status as securities and what compliance responsibilities marketplaces possess.
With NFTs under scrutiny, some firms are distancing themselves from the sector.
Starbucks dissolved its NFT rewards program, whereas GameStop shuttered its NFT marketplace following crypto service cuts.
