Two OpenSea users have filed a class-action lawsuit against the popular NFT marketplace, claiming it has been selling unregistered securities. Users Anthony Synayderman and Ital Bronshtein filed their suit in a Florida federal court on September 19, arguing that the NFTs they purchased, including pieces from the once-coveted Bored Ape Yacht Club collection, are now essentially worthless due to their alleged illegal status.
The lawsuit highlights a recent disclosure from the Securities and Exchange Commission (SEC) regarding a Wells notice sent to OpenSea, which suggests the company may face legal action for trading unregistered securities.
A Wells notice indicates that the SEC has been investigating and might pursue enforcement actions against the recipient.
Shnayderman and Bronshtein point to previous SEC cases involving NFT projects like Stoner Cats 2 and Impact Theory, where the agency ruled that those NFTs were indeed unregistered securities.
They argue that the NFTs they bought fit the definition of investment contracts under the Howey test, a legal standard that determines whether a transaction qualifies as an investment contract.
The plaintiffs allege that OpenSea misled them into buying these “worthless” NFTs, claiming the platform misrepresented its role in moderating listings that included unregistered securities. They further assert that OpenSea breached its warranty by failing to moderate its marketplace appropriately, leading to what they describe as unjust enrichment through transaction fees on these sales.
Adam Moskowitz, managing partner at The Moskowitz Law Firm and counsel for Shnayderman and Bronshtein, emphasized the need for a well-regulated environment for NFT sales, stating, “With today’s ever-changing regulation, there should be a process to sell NFTs in a well-regulated environment.”
“Conjuring from thin air a purported class action lawsuit based on our disclosure of an SEC Wells notice won’t make the allegations in the complaint true. We refute these allegations and look forward to defending against this baseless lawsuit,” said a spokesperson for OpenSea.
He expressed hope for a collaborative approach with OpenSea to create a better framework for consumers and the crypto industry moving forward.
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