Two former OpenSea users, Anthony Shnayderman and Itai Bronshtein, have withdrawn their proposed class-action lawsuit accusing the NFT marketplace of selling unregistered securities. The case, filed in September, came to a halt on November 7 when Shnayderman and Bronshtein voluntarily dismissed their suit in Florida federal court.
This followed Judge Cecilia Altonaga’s decision to permit OpenSea to compel the plaintiffs into arbitration, enforcing a clause in its terms of service. OpenSea argued that the users had agreed to resolve any claims in arbitration rather than court, including the very question of whether their allegations should be arbitrated.
OpenSea’s defense stance had been clear from an October filing, where the NFT marketplace announced its intent to seek arbitration as specified in its terms of use. The company indicated it would challenge any court decision denying arbitration, effectively putting the legal process on hold.
Pushback Against Regulatory Scrutiny
Adam Moskowitz, representing Shnayderman and Bronshtein, acknowledged that the arbitration clause left them with no option but to dismiss. “Our main goal,” Moskowitz shared, “was to build a framework for a sustainable, global NFT marketplace.” Despite the setback, Moskowitz suggested that OpenSea could still play a role in “monitoring NFTs traded on its platform” to protect consumers in the burgeoning NFT market.
The plaintiffs’ case initially gained momentum after OpenSea disclosed an August Wells notice from the Securities and Exchange Commission (SEC), which warned of potential enforcement action against the company. This disclosure hinted at possible SEC scrutiny over whether certain NFTs should be classified as securities. Shnayderman and Bronshtein argued that OpenSea’s platform may be “liable for facilitating the exchange of unregistered securities.” Citing recent SEC actions against projects like Stoner Cats 2 and Impact Theory, the plaintiffs highlighted concerns that OpenSea had not upheld its responsibility to moderate NFT listings on its marketplace.
OpenSea Committed to Compliance
In response to such claims, OpenSea has maintained a consistent approach toward compliance, emphasizing the role of arbitration in resolving user disputes. This approach aligns with broader industry concerns over navigating the uncertain regulatory waters surrounding NFTs and their classification.
As OpenSea prepares for a relaunch this December, the platform faces an uphill battle amid sluggish trading volumes. Aiming to reclaim its lead in a market that has seen dramatic shifts, OpenSea’s renewed strategy might hinge on its ability to adapt to evolving regulatory demands and rebuild user trust.
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