- Two artists filed a lawsuit against the U.S. SEC for unclear NFT regulations.
- The SEC intends to acquire fines and legal bills on NFTs without proper regulation is highly scrutinized.
The legal battle of the U.S. Securities and Exchange Commission (SEC) with other firms and personalities are resurfacing to the mainstream. Two renowned artists have filed a legal suit against the SEC due to the uncertain classification of non-fungible tokens (NFTs) as securities.
On July 29, songwriter Jonathan Mann, popularly known as “Song a Day Mann,” and law professor and filmmaker, Brian L. Frye approached a Los Angeles court to clarify whether their NFT art should be classified as a digital asset security.
The plaintiffs argues in the complaint:
“Should artists have to “register” their artwork before selling it to the general public? Should artists be forced to make public disclosures about the “risks” of buying their art? Should artists be required to comply with the federal securities laws, and the thousands of regulations and reams of interpretive guidance thereunder, just to offer their works to the public? Or can artists simply create, and sell, art?”
The SEC’s current opinion on NFTs creates uncertainty and interrupts innovation and creativity. Mann and Frye point out that without proper instructions, the SEC acquires substantial fines and legal bills, or is forcing to destroy the artworks.
Both of their lawyers assert in the complaint that the SEC’s approach threatens the artists and creators who experiment with fast-growing technology or have chosen it as their preferred medium.
Frye and Mann’s legal suit used Taylor Swift concert tickets to compare their case. It argues that it would be nonsensical for the regulator to class her NFT collectibles as securities.
Furthermore, the plaintiffs pointed out the SEC’s unfair actions against entertainment company Impact Theory and the Stoner Cats web series, which were alleged to involve unregistered offerings of NFTs, were unfair. These lawsuits in late 2023 became the regulator’s initial enforcement against NFTs.
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