“Surprised,” says OpenSea CEO after SEC raid

The United States Securities and Exchange Commission (SEC) has taken it upon itself to target several cryptocurrency platforms. And its next target is NFT trading platform OpenSea.

According to Devin Finzer, OpenSea’s chief executive, the company has received a “Wells Notice.” The SEC stated that the NFTs available for purchase or sale on the platform may be unregistered securities. In other words, the SEC claims that OpenSea may be trading in unregistered securities.

OpenSea CEO says he is “surprised”

A Wells Notice is a formal communication that the SEC sends to a company or individual recommending enforcement action. This notice comes when the SEC finds evidence that the company is committing possible violations of securities laws.

The Wells Notice gives the notified party an opportunity to respond and present arguments or evidence before the SEC formally decides whether to pursue legal action. OpenSea has yet to formally respond to the notice, but Finzer said he was “surprised” by the regulator’s stance.

“We are shocked that the SEC would take such a radical action against creators and artists. But we are ready to stand up and fight back. By targeting NFTs, the SEC would stifle innovation on an even broader scale: hundreds of thousands of artists and creatives online are at risk, and many do not have the resources to defend themselves,” said OpenSea CEO on X.

NFTs, Finzer said, are “creative assets” like art, collectibles, event tickets and more. The OpenSea CEO dismissed the SEC’s view of classifying them as stocks or some cryptocurrencies.

Retaliation?

Another problem with the SEC’s claim is that it could also target the artists and creators of NFTs themselves. OpenSea merely brokers the sales of these tokens, which are placed on the site directly by the artists.

The SEC’s ruling could result in even artists facing charges of trading securities. In that regard, Finzer said his team will pledge $5 million to “help cover legal fees for NFT creators and developers who receive a Wells Notice.”

Finzer also said that some artists have already filed lawsuits against the SEC, which he said “describes their fear that the sale of their art and music could be considered an unregistered securities offering.”

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