Two OpenSea users have proposed a class-action suit in the United States against non-fungible token (NFT) marketplace OpenSea, claiming it sells unregistered securities contracts.
Anthony Shnayderman and Itai Bronshtein claimed in a Sept. 19 suit filed in a Florida federal court that NFTs they purchased on OpenSea â including from the once high-priced Bored Ape Yacht Club collection â are worthless âdue to their illegal nature.â
In their arguments, the pair pointed to OpenSeaâs disclosure of a Wells notice from the Securities and Exchange Commission last month which they claimed âsuggests that OpenSea is in the hot seat and may be found liable for facilitating the exchange of unregistered securities.â
A Wells notice is a warning that the SEC has conducted an investigation and could bring an enforcement action against the noticeâs receiver.
The suit also points to successful SEC action against NFT projects Stoner Cats 2 and Impact Theory, where the regulator said the NFTs were unregistered securities sales.
Shnayderman and Bronshtein claimed the securities-defining Howey test shows the NFTs they bought on OpenSea were investment contracts under US securities laws, alleging they were an investment in a common enterprise and reasonably expected profits from otherâs efforts.
OpenSeaâs NFT listings were âdeceptive and misled the Plaintiffs into purchasing worthless and unlawful unregistered securitiesâ as OpenSea said it âmoderates the NFTs on its exchange, including âreal-world financial instrumentsâŠsecurities,ââ the suit alleged.
Highlighted excerpt of the lawsuitâs arguments claiming OpenSea was responsible for removing securities from its platform. Source: PACER
Shnayderman and Bronshtein claimed OpenSea breached a user warranty that said it âwould moderate the OpenSea exchange for unregistered securities.â
They also alleged it unjustly enriched itself by charging fees and accepting funds âthat it knew, or should have known, were derived from the sale of unregistered securities.â
In an emailed statement, Shnayderman and Bronshteinâs counsel, The Moskowitz Law Firm managing partner Adam Moskowitz, told Cointelegraph, âWith todayâs ever-changing regulation, there should be a process to sell NFTs in a well-regulated environment.â
âWe look forward to working with OpenSea, to structure the best avenue and future process, for both consumers and the crypto industry,â Moskowitz added.
OpenSea did not immediately respond to a request for comment.
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