SEC Sued Over Jurisdiction of Non-Fungible Tokens (NFTs)

SEC Sued Over Jurisdiction of Non-Fungible Tokens (NFTs)

The SEC has faced a lawsuit from US law professor Brian Frye and composer Jonathan Mann regarding the classification of NFTs as securities. The plaintiffs argue that the SEC's recent actions against NFT projects have created uncertainty for artists and creators. In two recent cases, the SEC charged Impact Theory and Stoner Cats 2 with selling unregistered securities in the form of NFTs. Both cases were settled. The plaintiffs argue that these cases have left artists and creators unsure whether their work falls under the SEC's jurisdiction. The lawsuit asks the court to clarify whether NFTs are securities and to halt the SEC from taking enforcement actions against NFT projects. The plaintiffs argue that the SEC should not be able to regulate NFTs without first going through the proper rulemaking process. The SEC has yet to comment on the lawsuit. However, the agency has previously stated that it believes NFTs can be securities if they meet certain criteria. The SEC's Division of Corporation Finance has issued guidance on how to determine whether an NFT is a security. The lawsuit is likely to have significant implications for the NFT industry. If the court rules in favor of the plaintiffs, it could limit the SEC's ability to regulate NFTs. This could make it easier for artists and creators to sell their work without having to worry about securities laws.