Two artists, Brian Frye and Jonathon Mann, have taken legal action against the U.S. Securities and Exchange Commission (SEC) to clarify whether NFTs fall under the commission’s jurisdiction. The lawsuit, filed on July 29, questions if creating and selling NFT art requires registration with the SEC and public disclosure of potential risks associated with the purchase.
Frye, a law professor and filmmaker, and Mann, a songwriter, argue that NFTs should not be classified as securities. Their attorneys drew a parallel with Taylor Swift concert tickets, which are resold and promoted without being considered securities. They contend that treating NFTs as securities, similar to Swift’s tickets, is “utterly nonsensical.”
The lawsuit seeks a declaration that the SEC’s enforcement actions against NFT projects, including those by Frye and Mann, are unlawful. The artists are concerned about the SEC’s approach, citing a previous case where the SEC targeted the YouTube channel Impact Theory for promoting NFTs as investments. The attorneys fear that similar actions could stifle artistic expression and innovation in the digital art space.
The case raises critical questions about the future of digital art and the regulation of emerging technologies. The outcome could have significant implications for artists and creators exploring NFTs as a new medium. The plaintiffs hope to prevent the SEC from treating NFT art as securities, which they believe would unduly burden artists experimenting with this evolving technology.
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