Artists Sue SEC to Clarify Regulatory Authority Over NFTs
In a significant legal development, two artists have filed a lawsuit against the United States Securities and Exchange Commission (SEC) seeking judicial clarification on whether the agency has authority over non-fungible tokens (NFTs).
Artist and Law professor Brian Frye and songwriter Jonathan Mann, known as “Song a Day Mann,” initiated the complaint on Monday in the U.S. District Court for the Eastern District of Louisiana, targeting the SEC and its five commissioners.
Proud to represent my client and friend Jonathan Mann @songadaymann in his brave and unfortunately necessary lawsuit against the SEC.
Art is not a security, and musicians working in a digital medium should not have to hire expensive securities lawyers just to release music. https://t.co/FBYL9FZZfG
— Jason Gottlieb (@ohaiom) July 29, 2024
Central to the lawsuit is their inquiry on whether artists need to register their NFT artworks with the SEC prior to public sale and if they are required to disclose any risks associated with purchasing their digital creations.
The plaintiffs’ attorneys have drawn a notable comparison to Taylor Swift concert tickets to underscore their argument. They contend that, similar to NFTs, Swift’s tickets are resold in secondary markets and promoted by the artist herself.
Yet, they argue, it would be unreasonable for the SEC to classify Swift’s tickets or collectibles as securities, highlighting the potential overreach of the SEC’s regulatory authority.
The lawsuit seeks declaratory and injunctive relief to prevent what the plaintiffs describe as “unlawful enforcement actions” by the SEC against NFT projects. This legal action reflects a growing apprehension among artists regarding the SEC’s position on digital art.
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