Two NFT artists have filed a lawsuit against the U.S. Securities and Exchange Commission, seeking the court’s answer to whether non-fungible tokens fall under the agency’s jurisdiction.
The lawsuit was filed by law professor Brian Frye and “Song a Day Mann” songwriter Jonathan Mann. complain The lawsuit was filed Monday in the U.S. District Court for the Eastern District of Louisiana against the SEC and its five commissioners.
Frye and Mann’s attorneys accused the SEC of “engaging in a campaign to assert jurisdiction over digital art sales,” citing two recent cases where the agency has focused on NFTs. Both are working on NFT projects and seeking court declaratory judgments.
SEC Brings First NFT Charges Against YouTube Channel and Podcast Studio shock theory Almost a year ago, the SEC said Impact Theory “encouraged potential investors to view their purchase of Founders Key as an investment in the business, and that if Impact Theory was successful in its efforts, investors would profit from the purchase.” “The order concludes that the NFTs offered and sold to investors were investment contracts and therefore securities.”
A month later, the agency I sued Stoner Cats 2 LLC is credited with raising $8 million from investors by releasing an unregistered NFT.
Both lawsuits ended in settlement.
“The SEC’s approach threatens the livelihoods of artists and creators who simply experiment with new and rapidly growing technologies or choose them as their preferred medium,” Frye and Mann’s attorneys said in the lawsuit filed Monday.
“Artists across the country suddenly face the specter of the SEC attacking the distribution of visual or musical art in unregistered securities offerings,” they added. “Artists—established and emerging—are suddenly faced with a bizarre question: Should I hire a securities lawyer to sell my art?”
The SEC declined to comment on the lawsuit.
The SEC’s previous NFT enforcement actions were consensual, leaving courts with little opportunity to consider whether NFTs were securities, Ashley Ebersole said. Chief Legal Counsel at 0x Labs and former SEC attorney.
Ebersol said the lawsuit highlights serious problems.
“SEC Chairman Gensler has made extensive statements on cryptocurrency jurisdiction, and the agency has settled lawsuits against NFT projects in the past, so NFT artists have every reason to be concerned and seek clarity,” Ebersole said in an emailed statement.
Are Taylor Swift tickets securities?
A lawyer representing both men said that while Mann and Frye may differ “in many ways” from singer Taylor Swift, they are “exactly on the same page” when it comes to the allegations.
People who buy Swift’s tickets and music can expect to profit, and Swift herself will make promotional statements, release new music and “promote aspects of her ecosystem,” the lawyers said.
“Imagine if the SEC decided that Taylor Swift’s songs or collectibles were securities (or simply securities if they were issued in NFT form) and ordered them destroyed. It sounds ridiculous, but that’s exactly what happened to Impact Theory and SC2,” the lawyers said.
Cryptocurrency executives and groups supported the complaint on Twitter on Monday.
“Wow,” said Katherine Minarik, Chief Legal Officer at Uniswap Labs. post About X. “The SEC’s application of securities laws has become so arbitrary and unlawful that *artists* are having to sue the SEC directly to protect their livelihoods. The SEC has collapsed.”
The Blockchain Association claimed: post The SEC has no jurisdiction over NFT art.
The group said in its filing that it was “unreasonable to expect musicians, designers and other artists to hire lawyers to advise the SEC on whether sales of their art would be considered a securities offering.”
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