OpenSea hit with Wells notice, says SEC lawsuit will ‘misinterpret law’

NFT marketplace OpenSea has been issued a Wells notice by the Securities and Exchange Commission (SEC) which is threatening to sue the firm on the grounds that non-fungible tokens (NFTs) on the platform are securities. 

OpenSea CEO Devin Finzer announced the notice on X (formerly Twitter) on Wednesday.

OpenSea has responded to the notice with an official statement in which it argues that NFTs are used for purchasing game items, supporting artists, and “boasting allegiance” to a sports team.

“Classifying NFTs as securities would not only misinterpret the law, but it would also jeopardize artists’ livelihoods, disempower collectors and gamers, and stifle innovation across the many promising use cases for NFTs,” it read.

OpenSea has received a Wells notice from the SEC threatening to sue us because they believe NFTs on our platform are securities.

We're shocked the SEC would make such a sweeping move against creators and artists. But we're ready to stand up and fight.

Cryptocurrencies have long…

— Devin Finzer (dfinzer.eth) (@dfinzer) August 28, 2024

Read more: Latest third-party breach leaks OpenSea user APIs

It continued, “We’re confident that OpenSea operates legally and that our users aren’t trading securities when they buy or sell NFTs using our platform.” 

The firm has also pledged $5 million to help cover the legal fees of any NFT creators that receive a Wells notice. OpenSea said, “We hope that the SEC will reconsider its stance and approach this issue with the open-mindedness it deserves.”

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