The SEC is considering classifying NFTs as securities, with OpenSea potentially facing a lawsuit, but the platform is prepared to fight back against the regulator's claims.
——Generated by ChatGPTToday, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox.Subscribe to the Empire newsletter.Wells, wells, wellsThe SEC’s apparently mulling calling NFTs — or secondary sales of NFTs — securities.Actually, to be completely fair, we really don’t knowwhatthey’re thinking.What we do know, though, is that they’ve wrapped up an investigation into OpenSea and a potential lawsuit may be on the horizon, per a Wells notice that the company said it received.OpenSea has received a Wells notice from the SEC threatening to sue us because they believe NFTs on our platform are securities.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…Suppose the SEC follows through and actually engages the NFT platform in a legal battle. In that case, it won’t necessarily be the first time that the regulator tries to claim that NFTs also count as securities (alongside a long list of tokens, though — as we’vediscussed— they’ve gotten plenty of pushback against that).Still, it will be the first time that the firm they’re targeting for NFTs actually fights back.BothImpact TheoryandStoner Catssettled with the SEC after the regulator claimed they violated securities laws with their NFT projects. In another case, the Department of Justice went after a former employee for insider trading, which could perhaps also imply that the things, aka NFTs, he was trading were, well, securities.Jason Gottlieb, who’s representing Jonathan Mann and Brian Frye intheir case against the SEC(in which they’re trying to suss out regulatory clarity around NFTs), said that he expects the agency to fall back on the settlements if they bring a case against OpenSea.“Where I think this precedence gets dangerous is the SEC has this immense power where it can come in against smaller projects or artists, and say, ‘we think that you’re violating the securities laws, we’re going to sue you, and if you want to fight us, you’re going to spend millions of dollars, and you’re going to spend the next few years locked in litigation.’ And frankly, most people can’t afford to do that,” Gottlieb explained.Pillsbury Winthrop Shaw Pittman partner David Oliwenstein also expects the former settlements to crop up.