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OpenSea Gets SEC 'Wells Notice' – Industry Reaction

Rounding up commentary on the SEC's latest enforcement action. Will all NFTs be treated as securities?

Updated Aug 28, 2024, 7:21 p.m. Published Aug 28, 2024, 5:51 p.m.

Donald Trump's popular trading card NFTs. Will they be found illegal as part of the SEC's new probe? (CollectTrumpCards.com)

This morning, OpenSea said it had received a Wells Notice from the Securities Exchange Commission warning the agency was about to sue the leading NFT platform for violation of securities laws. The threatened action is the latest in a long line of similar moves from the SEC, and the reaction from the crypto industry has been fierce and near-uniform. Here is a small, representative sample.

Tyler Winklevoss, founder of Winklevoss Capital Management and the Gemini exchange:

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The @SECGov is now trying to claim that NFTs are securities. What's next? Baseball cards? Comic books? @GaryGensler's bad faith and un-American war on crypto is expanding. Digital web3 creators and artists are now in the crosshairs. https://t.co/boCbFI0O3p
— Tyler Winklevoss (@tyler) August 28, 2024

Sheila Warren, CEO of the Crypto Council, a trade group (GG = Gary Gensler; leading an “anti-crypto army” was an ambition of Gensler ally Senator Elizabeth Warren (D-MA)):

Latest round of reg by enforcement spurred by GG, the general of the “anti-crypto army.”

We stand with @opensea and creators everywhere, and commend @dfinzer for his leadership. https://t.co/jqXdGrUlfw
— Sheila Warren (@sheila_warren) August 28, 2024

Third, we have Variant Fund's Jake Chervinsky, arguing that NFTs shouldn't be covered by laws invented many decades earlier (the Securities Act was passed in 1933):

The SEC has fully lost the plot.

The idea that a financial markets regulator established in the 1930s would have jurisdiction over digital art in the 2020s defies not only common sense but also the SEC's statutory authority.

Thanks to @opensea for fighting the good fight 🫡 https://t.co/7Fxx0Ulv5m
— Jake Chervinsky (@jchervinsky) August 28, 2024

Next up: Gwart, self-described "crypto-Twitter troll," discussing the wider implications of the SEC apparently going after the very-expansive NFT category:

If opensea is a securities exchange then so is Etsy and all the hipsters selling pieces of bedazzled driftwood that say “live, laugh, love” for $800 should be thrown in jail too. We just want consistency here.
— Gwart (@GwartyGwart) August 28, 2024

Bankless co-founder Ryan Sean Adams:

The SEC is now planning to sue OpenSea under the claim that NFTs are securities.

So yes @RitchieTorres, apparently Gary Gensler does think tokenized pokemon cards are securities.

OpenSea is now the 6th American born crypto success story under attack by SEC this year - they're…
— RYAN SΞAN ADAMS - rsa.eth 🦄 (@RyanSAdams) August 28, 2024

VC Adam Cochrane:

Easily one of the dumbest Hail Marys Gensler has thrown and yet another reason why he has to be out under any new admin.

It’s clear NFTs are art.

Can you sell art as a security? Sure see @Masterworks

Does OpenSea do that? No.

And the SEC is also targeting them once they’ve… https://t.co/0PFy7IaiM4
— Adam Cochran (adamscochran.eth) (@adamscochran) August 28, 2024

Ex-CFTC Commissioner Brian Quintenz (now at a16z):

News of @Opensea receiving a Wells Notice shows plain and simple that the current SEC’s crusade against the crypto industry continues unabated. This is in contrast to what Vice President Harris said two weeks ago announcing her economic agenda: pic.twitter.com/cafsHJ6DhU
— Brian Quintenz (@BrianQuintenz) August 28, 2024

Bitcoiner Jameson Lopp arguing that, if the SEC's intent is to protect investors, it's years late:

The SEC is swooping in to protect investors from digital art... several years after NFT investors lost all their money. 🤡https://t.co/PgpLQR3AqW
— Jameson Lopp (@lopp) August 28, 2024

Roham Gharegozlou, CEO of Dapper Labs, which has several NFT projects:

NFTs that are not financial in nature are clearly not securities and most lawmakers we interface with understand this — we @dapperlabs are working toward legal clarity for NFTs through forthcoming legislation to be introduced in Congress and support OpenSea in their fight as well https://t.co/zhj4LIetjW
— roham (@roham) August 28, 2024

Rep. Wiley Nickel (D-NC):

Very disappointing to see @SECGov’s continued regulation by enforcement, now targeting #NFT marketplace @opensea.

The SEC and Gary Gensler should abandon this path and work with Congress to establish clear and fair regulations that foster innovation and keep jobs in the U.S.
— Rep. Wiley Nickel (@RepWileyNickel) August 28, 2024

And finally, Anthony Scaramucci, who says Gensler is wrecking recent Democratic efforts to make allies in the crypto community:

Gensler wants Harris to lose the election. https://t.co/GT2PpaGIt8
— Anthony Scaramucci (@Scaramucci) August 28, 2024

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.

Opinion

Benjamin Schiller

Benjamin Schiller is CoinDesk's managing editor for features and opinion. Previously, he was editor-in-chief at BREAKER Magazine and a staff writer at Fast Company. He holds some ETH, BTC and LINK.