In particular, OpenSea does not want to admit liability under the SEC’s test. They're cozying up to Commissioner Hester Peirce, asking to be excluded from securities regulations, claiming they're not really an exchange. Don't buy it. In other words, it’s not purely about innovation. It’s about carving out regulatory space for a digital Wild West where they get rich while you pay the price.

Freedom For Whom? Not You.

Let's be clear: OpenSea's argument that they don't "execute transactions" or "bring together buyers and sellers" is a carefully crafted smokescreen. They facilitate those transactions. They provide the platform. They profit from every sale. To allow them to pretend they’re something other than the active participants they are would be disingenuous at best, and downright duplicitous at worst.

Think about it. If a company builds a casino but claims it's not responsible for the gambling that happens inside because it doesn't personally place the bets, would you accept that? Of course not. The casino essentially lays out the cards, the table, the lighting, the music and it decides the rules. OpenSea does the same for NFTs.

What happens in an unregulated casino? The house always wins, and the players – particularly the most vulnerable ones – get fleeced. That's the future OpenSea is lobbying for.

The Scam Engine Is Ready

The NFT space as a whole is incredibly unregulated, a breeding ground for scams. It opens the door to rug pulls and other forms of market manipulation. We’ve watched thousands of projects disappear overnight, leaving investors stuck with millions of dollars worth of worthless jpegs. We’ve watched as wash trading has propped up prices, enticing duped consumers to jump in. We’ve watched insider trading run rampant, with the privileged cashing in on non-public, advanced information.

Now, consider what would happen if OpenSea has its way and the SEC totally washes its hands of NFT marketplaces. That’s when the scam engine will be operating at full capacity. The con artists will be emboldened. And the victims would be left holding the bag with no recourse whatsoever.

Who are these victims? Too frequently, those are young people, people of color, and other individuals who are new to the world of investing. They’re the people who are most vulnerable to being preyed upon by these scams. They are by far the ones who can least afford to lose their money.

Is this the “innovation” we’re trying to promote? A Wild West where the dark side of capitalism allows the wealthy to feast on the worrying lives of the less fortunate?

OpenSea plays up the SEC’s “watering down” approach to crypto. Specifically, they point to memecoins and stablecoins not being considered securities as the main driving force behind this move. This is exactly the problem! This is cherry-picking examples to fit their narrative and sidesteps the basic, common-sense need for consumer protection. Simply asserting that some digital assets are not securities does not absolve all of them from ever being so or NFT marketplaces from lacking liability.

SEC's Soft Stance? Follow The Money

The mere fact that the SEC is even entertaining OpenSea’s request is a troubling sign. This isn’t a question of “clarity”; this is a question of power and influence. So why is the SEC apparently backtracking on its hard line against crypto? Might it instead be due to the influence of sustained lobbying campaigns by well-funded crypto firms? Is it perhaps political pressure from the crypto libertarian wing that views crypto as a means to deregulate the overall financial system?

This isn’t only a problem when it comes to NFTs — it’s a matter of the future of financial regulation. We are at an important crossroads. Will we allow corporations to write their own rules, or will we fight for transparency and accountability?

It's time to call OpenSea's bluff. Now, a year later, it’s time for advocates to start demanding greater regulatory scrutiny of NFT marketplaces. It’s high time investors received real protections from scammy, unregulated products and market manipulation.

Don't let OpenSea pull a fast one. This isn’t taking away their freedom. This is about putting them in a freedom trap. A cynical scheme to fatten a few pockets at the public’s expense. Let's not fall for it.

What can you do?

  • Contact your representatives and tell them you support stronger regulation of the NFT space.
  • Share this article and spread awareness about the risks of unregulated NFT marketplaces.
  • Be skeptical of any NFT project that promises quick riches or guarantees profits.
  • Do your own research before investing in any NFT.
  • Demand transparency and accountability from NFT marketplaces like OpenSea.

Don't let OpenSea pull a fast one. This isn't about freedom; it's about a trap. A trap designed to enrich a few at the expense of many. Let's not fall for it.