OpenSea Warned by SEC, Alluding to NFTs as Securities

The US Securities and Exchange Commission (SEC) has sent a warning to the OpenSea NFT exchange, accusing the NFTs traded on it of being securities.

According to OpenSea CEO Devin Finzer, this NFT exchange unexpectedly received a Wells Notice from the US Securities and Exchange Commission (SEC).

Although he did not specify the content of the notice, Mr. Finzer affirmed that the SEC believes that some NFTs traded on it are securities.

The OpenSea CEO stated that this incident essentially affects not only the exchange, but also thousands of content creators who are creating and trading NFTs. Mr. Finzer believes that NFTs are also intellectual property like art, in-game items, domain names, event tickets, etc., which are not securities in nature and have no reason to be targeted by the SEC.

OpenSea announced that it would set up a $5 million legal fund to help content creators caught up in the incident, as well as stand ready to fight back against the SEC.

It is not yet clear whether the SEC's warning is aimed at large NFT collections trading on OpenSea.

As reported by Coin68, in addition to the two lawsuits against Binance and Coinbase that are still in the process of arbitration, the SEC in 2024 sent Wells Notices to many organizations and companies in the cryptocurrency industry, including stock and crypto trading platform Robinhood, DEX exchange Uniswap, exchange Kraken, MetaMask wallet developer Consensys, and at least three VC investment funds. The SEC also imposed a $4.47 billion fine on Do Kwon and Terraform Labs, and $125 million on Ripple.

On the other hand, the SEC also received some failures such as having to end the securities investigation targeting Ethereum and quickly "turn around" to approve the Ethereum ETF, as well as ending the investigation into Paxos/BUSD and Stacks without any further legal action.