Two clients of OpenSea have filed a class-action lawsuit against the NFT marketplace, accusing it of selling unregistered securities contracts. This was reported by Cointelegraph citing court documents.
Anthony Schneiderman and Itai Bronstein claimed that the non-fungible tokens purchased on the platform, including Bored Ape Yacht Club, are worthless “due to their illegal nature.”
The plaintiffs pointed to OpenSea’s disclosure of a Wells notice from the SEC in August. In their view, the situation indicates that the marketplace “is in a difficult position and may be held liable for facilitating the exchange of unregistered securities.”
The lawsuit also references successful SEC actions against NFT projects Stoner Cats 2 and Impact Theory, which faced allegations of unlicensed securities offerings in the form of non-fungible token sales.
The plaintiffs argue that the Howey Test indicates NFTs qualify as investment contracts under U.S. law, as they represent a financial investment in a common enterprise with an expectation of profit.
According to the lawsuit, token listings on OpenSea were “deceptive and misled investors into purchasing worthless and illegal securities.”
Schneiderman and Bronstein assert that the marketplace violated its user agreement, which obliges the company “to moderate the OpenSea exchange to protect against unregistered securities.”
“Given today’s ever-changing regulation, a process for selling NFTs in a well-regulated environment is necessary. We look forward to working with OpenSea to structure the best path and future process for both consumers and the crypto industry,” noted Adam Moskowitz, the attorney representing the plaintiffs from Moskowitz Law Firm.
In September, NFT Evening experts concluded that 96% of non-fungible tokens are dead.
In the same month, CEO of Pudgy Penguins Luca Netz described NFTs as the best way to build a community.