Facing a steep drop in NFT trading volumes, is set to launch a revamped platform in December to reclaim its position in the market.
CEO Devin Finzer teased the reimagined marketplace on X, saying, “We’ve been quietly cooking at OpenSea… we built a new OpenSea from the ground up.” The announcement comes almost a year after OpenSea laid off half of its workforce and began work on what Finzer called “OpenSea 2.0.”
Once the leading NFT marketplace, OpenSea lost massive ground to rival platform Blur in late 2022. Blur attracted users by offering sophisticated trading tools and token rewards, drawing NFT traders away from OpenSea’s basic buy-and-sell format. Despite some recent recovery in market share, OpenSea has struggled with the overall market downturn, with trading volumes hitting their lowest in over three years.
In early 2023, monthly trading volumes for Ethereum-based NFTs were as high as $868 million, but they have since plummeted to just $136 million last month. OpenSea’s upcoming overhaul, which includes a waitlist for early access, signals an effort to align more closely with traders’ demand for advanced functionality and user incentives, a strategy Blur used successfully to disrupt the market.
The news comes nearly two months after OpenSea received a Wells notice from the U.S. Securities and Exchange Commission (SEC), indicating the regulator’s intent to pursue an enforcement action.
OpenSea CEO Devin Finzer said the SEC believes NFTs on their platform may be considered securities.
A Wells notice is a preliminary warning that informs recipients of potential charges that may be brought against them, typically leading to enforcement actions.
Finzer stated that OpenSea will contest the notice and has pledged $5 million to cover legal fees for NFT creators and developers who may receive similar notices. He added that “every creator, big or small, should be able to innovate without fear.”
OpenSea’s receipt of a Wells notice suggests that the SEC might consider NFTs as securities, moving into legally uncharted territory. This comes after the SEC took action against NFT projects like Impact Theory and Stoner Cats in 2023, accusing them of violating securities laws. Both cases were settled, but the actions caused uncertainty and concern within the NFT community.
The recent enforcement actions, along with class-action lawsuits against other NFT companies, led to hesitation among creators and businesses. For example, DraftKings recently shut down its NFT business, citing “recent legal developments.”
Finzer referred to a lawsuit filed by two NFT artists in Louisiana seeking clarification on whether their projects would be considered securities, arguing that regulatory uncertainty could deter creators from producing digital art.
The SEC has also pursued actions against other crypto entities, including issuing a Wells notice to Coinbase in March 2023 and scrutinizing DeFi protocol Uniswap and Robinhood for securities violations.
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