NFT Marketplace OpenSea Gets Wells Notice, May Face SEC Action

investopedia.com:

OpenSea, one of the largest marketplaces for non-fungible tokens (NFTs) may be facing regulatory action from the U.S. Securities Exchange Commission (SEC).

The company has received a Wells Notice—a notification from the regulator about a completed investigation and any potential enforcement actions—its CEO Devin Finzer said in a post on X.

According to Finzer, the SEC alleges that sale of NFTs on OpenSea broke securities laws because NFTs are securities and those transactions constituted sales of unregistered securities.

NFTs are unique digital assets that provide proof of ownership of an underlying asset such as art, trading cards, sports memorabilia etc. that is verified on a blockchain. They may be exchanged for cryptocurrencies or dollars but are called non-fungible because they cannot be exchanged for each other.

OpenSea contests that the regulator's allegations do not apply and that it is «ready to stand up and fight.»

«NFTs are fundamentally creative goods: art, collectibles, video game items, domain names, event tickets, and more, Finzer wrote, adding, „we should not regulate digital art in the same way we regulate collateralized debt obligations.“

This action by the SEC is not isolated, as it follows a pattern of increased scrutiny of crypto-related companies. Earlier this year, decentralized exchange Uniswap and blockchain technology firm Consensys also received Wells Notices, indicating a broader regulatory focus on the cryptocurrency and decentralized finance (DeFi) space. Robinhood (HOOD) also disclosed a Wells Notice against its crypto platform in May while crypto exchanges, such as Coinbase (COIN) and Kraken, have ongoing cases with the SEC.

But SEC's enforcement approach has raised concerns about its