OpenSea, the largest NFTs marketplace, got hit with a new lawsuit from plaintiffs, Anthony Shnayderman and Itai Bronshtein. The class action lawsuit in Miami federal district court accuses OpenSea of selling unregistered securities in the United States.
The plaintiffs believe that the NFT marketplace deceived investors by stating on its website that the NFTs they sell are not securities. They referenced the litigation involving the FTX cryptocurrency collapse, which ruled that NFTs are unregistered securities.
OpenSea is selling unregistered securities
According to the court documents, NFTs sold on OpenSea qualify as securities under US law and based on Howey’s Test. People are investing in NFT projects, which are common enterprises in this case. Investors expect to profit, relying on the effort of the NFT project team. Hence, NFTs are unregistered securities under US laws.
Shnayderman and Bronshtein incurred financial losses. They still have active accounts on OpenSea and hold various NFTs from projects like Bored Ape Yacht Club, the Sandbox LANDs, Spooky Boys Country Club, and M Ape Kids Club M1. Shnayderman and Bronshtein incurred losses by selling their Pudgy Penguins and Mad Ape Tournament NFTs on the marketplace
The court filing stated that the plaintiffs are representing global, nationwide, New York, and Florida classes of individuals/entities. This includes anyone who purchased NFTs from OpenSea, which likely equates to thousands of people. The firm did not release any official comment.
Adam Moskowitz, the managing partner of the Moskowitz Law Firm, is one of the attorneys representing the plaintiffs. In an article from Law.com, he stated, “We want to use this litigation to help create the framework of NFTs moving forward. Let’s now sit down and try to work on constructive NFT regulation…”
Finzer posts a job while Atallah hides
Devin Finzer and Alex Atallah, the co-founders of OpenSea have been moving differently. Devin, who resides in Miami Beach, Florida, listed a job post last month. The founder is looking for a personal assistant, indicating active work on OpenSea.
Atallah, on the other hand, has stayed behind the scenes since the NFT space was hit by the bear market. It was reported he did not attend major events like NFT.NYC.
OpenSea or Ozone Networks Inc. was founded in 2017 and achieved massive success as the leading NFT marketplace.
In Q4 of 2021, during the bull run, and NFTs mania, the NFTs marketplace giant gained $186 million in revenue compared to $9 million in Q2 of the same year.
Afterwards, OpenSea has been through many controversies including insider trading from its head of product who’s been let go. The platform incurred massive losses amounting to $170.7 million in Q2 of 2022 based on the lawsuit documents.
In 2023, OpenSea received a Wells Notice from the US Securities and Exchange Commission (SEC). The notice states that the SEC is conducting an investigation and suggests OpenSea violated US law by selling unregistered securities.
