Two users have filed a class-action lawsuit against the NFT marketplace OpenSea, accusing the platform of selling unregistered securities contracts.
The lawsuit, brought by Anthony Shnayderman and Itai Bronshtein, was filed on September 19.
According to Law.com, the users claim that the NFTs they purchased through OpenSea, including high-profile ones like Bored Ape Yacht Club (BAYC), are now worthless due to the allegedly illegal status of the contracts.
A key point in the lawsuit is the Wells notice OpenSea received from the U.S. Securities and Exchange Commission (SEC) last month. The SEC claimed that NFTs sold on the platform are unregistered securities, which has fueled concerns about the legality of such sales.
Shnayderman and Bronshtein argue that the NFTs they bought were investment contracts under U.S. securities laws. They allege the NFTs represented an investment in a common enterprise with the expectation of profit from others’ efforts, making them subject to securities regulations.
A spokesperson for OpenSea said, “Conjuring from thin air a purported class action lawsuit based on our disclosure of an SEC Wells notice won’t make the allegations in the complaint true.”
“We refute these allegations and look forward to defending against this baseless lawsuit.”
OpenSea has already been significantly impacted by the SEC’s actions. After receiving the Wells notice, OpenSea’s co-founder and CEO, Devin Finzer, expressed surprise, saying, “We’re shocked the SEC would make such a sweeping move against creators and artists.” Finzer also stated that OpenSea is prepared to “stand up and fight.”
In an effort to support its users and creators, OpenSea has partnered with Coinbase and other companies to create a $6 million legal defense fund. This initiative aims to offer free legal assistance to those facing potential regulatory actions from the SEC.
NFT regulations remain unclear, and as legal challenges grow, many companies are either leaving the space or facing penalties.
Last year, the SEC fined Impact Theory, a Los Angeles-based media company, $6.1 million for offering unregistered NFT securities known as “Founder’s Keys.” During the same year, the SEC imposed a $1 million fine on the Stoner Cats NFT project for similar violations.
More recently, Dapper Labs settled a lawsuit over its NBA Top Shot NFTs by agreeing to pay $4 million.
Editor’s note: This article has been updated on September 24, 2024, with a comment by a spokesperson for OpenSea.
