Ripple CLO Stuart Alderoty Publicly Issues a Challenge to the SEC Over NFT Classification

The chief legal officer of the crypto firm Ripple is publicly issuing a challenge to the U.S. Securities and Exchange Commission (SEC).

The crypto firm Ripple’s chief legal officer is taking aim at the U.S. Securities and Exchange Commission (SEC) following news that the SEC has served NFT marketplace OpenSea with a Wells Notice.

Yesterday, NFT marketplace OpenSea’s CEO Devin Finzer announced that the SEC had served the company with a Wells Notice, which is a warning that the SEC is planning to pursue legal action against a company. It is not an indication of wrongdoing.

“OpenSea has received a Wells notice from the SEC threatening to sue us because they believe NFTs on our platform are securities,” said Finzer.

“We’re shocked the SEC would make such a sweeping move against creators and artists. But we’re ready to stand up and fight.”

Cryptocurrency firms have been in the SEC’s sights for a long time, with companies like Coinbase, Uniswap, Robinhood, Kraken and Consensys having faced the SEC’s single-track approach of ‘regulation by enforcement.’

However, this move marks a foray into uncharted territory. By targeting NFTs, the SEC could stifle innovation on an even broader scale, as hundreds of thousands of online artists and creatives stand to be affected—and many do not have the resources to defend themselves.

NFTs are seen by many as the next wave in artistic intellectual property ownership, and according to Ripple CLO Stuart Alderoty, the SEC ruled nearly 50 years ago that art galleries did not have to register with the SEC, even when promoting and selling to buyers who had investment motives.

“Fun fact: In 1976, the SEC ruled that art galleries, even when promoting and selling to buyers that had investment motives, didn’t need to register with the SEC,” said Alderoty.

The SEC had not responded to Alderoty’s statement at the time of writing.

Featured Image: Shutterstock/ded pixto

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