SEC Wells Notice Issued to OpenSea, CEO Pledges to Fight Back

Key Points:

• OpenSea received an SEC Wells notice alleging that the NFTs sold on its platform may be unregistered securities.
• OpenSea’s CEO expressed surprise at the SEC’s move and pledged to fight back, defending the rights of creators and artists.

OpenSea, one of the largest marketplaces for trading non-fungible tokens, has received a Wells notice from the US Securities and Exchange Commission, the platform’s co-CEO Devin Finzer said on Wednesday.

Read more: New OpenSea Functionality Supports Users To Bridge And Swap Tokens For Free

OpenSea Received SEC Wells Notice Over NFTs Sales

The SEC Wells notice means the commission may soon launch an action against OpenSea over the role it has played in selling NFTs considered by the commission as unregistered securities.

A Wells notice usually means that charges are about to be filed by the SEC and provides an opportunity for the recipient to respond before bringing on formal proceedings. To this, Finzer not only expressed surprise but he also said, “We’re shocked the SEC would make such a sweeping move against creators and artists,” and promised that the company was “ready to stand up and fight.”

Broader Crypto Crackdown Continues as SEC Targets OpenSea

The move against OpenSea is part of a broader regulatory crackdown on the digital currency industry led by SEC Chair Gary Gensler. An SEC Wells notice does not necessarily mean a lawsuit will be filed but marks a significant step in the increasing scrutiny of the NFT sector by the agency.

Such regulatory scrutiny does not come alone to OpenSea, though. Other crypto companies include decentralized exchange Uniswap, Robinhood also received similar notices this year. In March of 2023, the leading American cryptocurrency exchange Coinbase got its own SEC Wells notice.

The actions of the SEC have a chilling effect across the NFT market. Past enforcement actions against NFT projects, including Impact Theory and Stoner Cats, have settled, further emboldening caution among NFT creators and platforms. In July, DraftKings announced it was shuttering its NFT business, with the murky regulatory environment among the various contributors.