OpenSea Faces Lawsuit Over Alleged Sale of Unregistered Securities

Two users of the OpenSea platform have initiated a class action lawsuit in a Florida court, claiming the NFT marketplace is involved in the sale of unregistered securities.

The lawsuit, filed by Anthony Schneiderman and Itai Bronstein on September 19, argues that NFTs they bought through OpenSea, including items from the well-known Bored Ape Yacht Club collection, have dropped in value due to the alleged illegal nature of these transactions.

The lawsuit highlights a warning from the U.S. Securities and Exchange Commission (SEC), indicating that OpenSea could face legal repercussions for facilitating the trade of assets considered unregistered securities. According to the SEC, it has already conducted an investigation and may pursue enforcement actions against the platform.

Schneiderman and Bronstein compared their situation to other NFT projects like Stoner Cats 2 and Impact Theory, which the SEC previously deemed unregistered securities. They argue that, under the Howey test, the NFTs they purchased meet the criteria for investment contracts, as they expected profits from their involvement.

The plaintiffs further accuse OpenSea of deceiving users by presenting NFTs as legitimate while allowing the sale of unregistered securities. They also allege that the platform profited from transaction fees linked to these sales.

Adam Moskowitz, the lawyer representing the case, stressed the necessity for clearer guidelines in the evolving NFT market and expressed a willingness to work with OpenSea to create a more transparent process that benefits both consumers and the broader crypto sector.