Two OpenSea users have filed a class-action lawsuit against the NFT marketplace, claiming that the sold NFTs are illegal unregistered securities.
Allegations against OpenSea
Anthony Shnayderman and Itai Bronshtein claimed that the NFTs they purchased on OpenSea, including those from the once high-priced Bored Ape Yacht Club collection, are worthless “due to their illegal nature.” They pointed to OpenSea’s disclosure of a Wells notice from the Securities and Exchange Commission (SEC) last month, which they claimed suggests that OpenSea may be found liable for facilitating the exchange of unregistered securities.
Precedents and SEC actions
The suit also points to successful SEC actions against NFT projects Stoner Cats 2 and Impact Theory, where the regulator said the NFTs were unregistered securities sales. Shnayderman and Bronshtein argued that the Howey test, which defines securities, shows that the NFTs they bought on OpenSea were investment contracts under US securities laws, as they were an investment in a common enterprise with an expectation of profits from others' efforts.
Comments and next steps
In an emailed statement, the plaintiffs’ counsel Adam Moskowitz stated, “With today’s ever-changing regulation, there should be a process to sell NFTs in a well-regulated environment.” Moskowitz added that they look forward to working with OpenSea to structure the best avenue and future process for both consumers and the crypto industry. OpenSea did not immediately respond to a request for comment.
Further developments will show how this lawsuit and ongoing SEC actions may impact the NFT market and its regulation in the future.
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