- Two OpenSea users have filed a class-action lawsuit, alleging that the platform sold unregistered securities in the form of NFTs, including from the Bored Ape Yacht Club collection.
- The lawsuit further accuses OpenSea of unjust enrichment, claiming the company collected fees and accepted funds from the sale of NFTs that it “knew, or should have known,” were unregistered securities.
OpenSea, the largest NFT marketplace is grappling with a class-action lawsuit from two users, Anthony Shnayderman and Itai Bronshtein, who claim the platform facilitated the sale of unregistered securities. Oozing anger and disappointment that reflect their deep frustrations, the two filed a lawsuit on September 19th in a federal court in Florida.
Initially perceived as a conflict between the crypto community and the SEC, the war unfolds internally due to growing disillusionment. The plaintiffs claim the NFTs they bought from the highly coveted Bored Ape Yacht Club collection are now worthless owing to their illicit state.
The two-point to the Howey test, a standard used by the U.S. courts to determine whether an asset qualifies as an investment contract. Most notably, the Howey test has been mentioned multiple times in the popular Ripple vs SEC lawsuit.
According to Shnayderman and Bronshtein, the NFTs they purchased represent an investment in a common enterprise, with the expectation of profit derived from the efforts of others. Under this framework, they allege that OpenSea’s NFT listings should have been regulated as securities.
Tracing a path back to August 28th, OpenSea, via its CEO, disclosed receiving a Wells notice from the U.S. SEC. In their arguments, the pair of complainants pointed to this event. A Wells notice typically signals that the SEC has conducted an investigation and may pursue enforcement action.
Shnayderman and Bronshtein claim this notice suggests OpenSea could be held liable for enabling the exchange of unregistered securities, heightening their concerns about the legitimacy of their NFT purchases.
Additionally, the plaintiffs also drew comparisons to previous SEC actions against NFT projects, including Stoner Cats 2 and Impact Theory, where the regulator deemed the NFTs sold as unregistered securities. These cases set a precedent that the plaintiffs believe applies to their situation with OpenSea.
The lawsuit pushes the envelope by accusing OpenSea of deceptive practices. Shnayderman and Bronshtein allege that OpenSea misled them by claiming to moderate NFTs on its platform for securities or financial instruments. According to the plaintiffs, the platform failed to fulfill its user warranty, which promised to remove unregistered securities from the marketplace.
This alleged breach of warranty, they claim, contributed to their financial loss, as they unknowingly purchased NFTs that could now be deemed worthless.
The lawsuit further accuses OpenSea of unjust enrichment, claiming the company collected fees and accepted funds from the sale of NFTs that it “knew, or should have known,” were unregistered securities.
