Key Takeaways
- The SEC is ending its investigation into OpenSea without filing securities charges.
- OpenSea had prepared a $5 million legal fund for potential SEC actions against NFT artists and developers.
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The US SEC is wrapping up its investigation into OpenSea, the leading marketplace for NFTs, and will not pursue any enforcement action claiming that NFTs are securities.
According to a Friday report from Bloomberg, OpenSea received word from the SEC that its investigation is complete and no enforcement action will be taken.
OpenSea’s co-founder and CEO Devin Finzer views the SEC’s decision to close the investigation is a win for the NFT and web3 community. Finzer believes the agency’s initial stance on NFTs was a misinterpretation of existing laws and would hinder innovation in the space.
“This is a win for everyone who is creating and building in our space. Trying to classify NFTs as securities would have been a step backward—one that misinterprets the law and slows innovation,” Finzer wrote on X. “Every creator, big or small, should be able to build freely without unnecessary barriers.”
The major development comes after OpenSea received a Wells notice from the SEC last August, indicating the regulator’s intention to pursue legal action.
A Wells notice is a formal notification that the SEC plans to pursue legal action. It provides the recipient with an opportunity to respond and present arguments against the impending lawsuit before the SEC makes a final decision.
The Wells notice suggested the SEC believed some or all of the NFTs traded on the platform constituted securities, a stance that has been in line with the agency’s broader efforts to regulate crypto markets over the past three years.
In preparation for potential legal challenges, OpenSea had allocated $5 million to a legal fund designed to support NFT artists and developers who might receive similar notices from the SEC.
The SEC’s stance on classifying NFTs as securities has faced opposition from the crypto community, with critics arguing that such classification could impede innovation in the digital art and collectibles market.
The SEC is also dropping a lawsuit against Coinbase. Earlier today, Coinbase said that SEC staff agreed in principle to dismiss its lawsuit against the exchange, awaiting final approval from the commissioners.
The dismissal, if finalized, will be with prejudice, preventing the SEC from re-filing similar charges and may influence the outcome of related cases against other crypto exchanges.
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