On Wednesday, OpenSea, the largest marketplace for non-fungible tokens (NFTs), received a Wells notice from the US Securities and Exchange Commission (SEC), indicating the regulator’s intent to potentially initiate legal action, asserting that NFTs traded on the platform may be classified as securities.

CEO Devin Finzer Responds To SEC Wells Notice

OpenSea CEO Devin Finzer announced the news in a post on X (formerly Twitter), where he expressed his shock at the SEC’s decision. Finzer emphasized the impact this move could have on creators and artists, for which he noted, “We are ready to stand up and fight.”

The SEC has long been scrutinizing the cryptocurrency and digital asset landscape, targeting various companies, including Coinbase, Uniswap, and Kraken, for perceived regulatory violations.

Finzer criticized the SEC’s regulation by enforcement approach, arguing that it stifles innovation and poses risks to “hundreds of thousands” of artists and creators who lack the resources to navigate complex legal battles.

OpenSea Pledges $5 Million To Support Creators

Finzer also referenced a lawsuit filed against the SEC by musician “Songadaymann” and conceptual artist Brian L. Frye, who fear that their creative works might be classified as unregistered securities offerings.

According to Finzer, this legal uncertainty could jeopardize the livelihoods of many creators in the NFT space. Finzer further noted:

NFTs are fundamentally creative goods: art, collectibles, video game items, domain names, event tickets, and more. We should not regulate digital art in the same way we regulate collateralized debt obligations.

In response to the SEC’s actions, OpenSea has committed $5 million to support legal fees for NFT creators and developers who receive Wells notices, reinforcing their stance that every creator, regardless of scale, should be able to innovate without fear of regulatory repercussions.