- On Monday, Jonathan Mann, the songwriter of Song a Day Mann, and law professor Brian Frye filed a case against the U.S. Securities and Exchange Commission.
- Although Mann and Frye are not the same as singer Taylor Swift in many aspects, their attorneys argued that both parties are in the exact same situation with regard to the case.
In order to determine if non-fungible tokens are under the purview of the U.S. Securities and Exchange Commission, two NFT artists filed a lawsuit against the agency.
In the U.S. District Court for the Eastern District of Louisiana, law professor Brian Frye and “Song a Day Mann” songwriter Jonathan Mann filed the complaint against the SEC and its five commissioners on Monday.
Citing two recent instances in which the agency focused on NFTs, the attorneys for Frye and Mann charged that the SEC was engaged in a campaign to assert jurisdiction over sales of digital art. Both are seeking a declaratory decision from the court and are working on NFT initiatives.
Nearly a year ago, the SEC filed its first Notice of Defamation (NFT) against Impact Theory, a podcast studio and YouTube channel. According to the SEC, Impact Theory urged prospective investors to consider buying a Founders Key as an investment in the company, promising profits for anyone who did so if Impact Theory was successful in its endeavors. According to the order, the NFTs that were sold and given to investors were securities since they were investment contracts.
A month later, the agency filed a lawsuit against Stoner Cats 2 LLC for engaging in an unregistered NFT offering that attracted $8 million in investment from investors.
Settlements were reached in both cases
Lawyers for Frye and Mann stated in the complaint on Monday that the SEC’s strategy endangers the careers of artists and creators who are either choosing to use this new, rapidly developing technology as their preferred medium or are just experimenting with it.
They noted that artists around the country are suddenly threatened by the SEC for distributing their works of music or art in the form of an unregistered securities offering. Artists, both well-established and emerging, are now confronted with an odd query: is it necessary for them to get a securities lawyer in order to sell their artwork?
Regarding the complaint, the SEC declined to comment.
Ashley Ebersole, general counsel at 0x Labs and a former SEC lawyer, stated that since the SEC settled its prior NFT enforcement actions, courts have not often had the chance to decide whether or not NFTs are securities.
Ebersole remarked that the complaint raises important issues.
NFT artists have good reason to be concerned and want some clarification, according to Ebersole, who sent out an email. SEC Chair Gensler has made broad remarks about the agency’s jurisdiction over cryptocurrencies and the agency has obtained settlements in previous lawsuits against NFT initiatives.
Ebersole remarked that the complaint raises important issues.
NFT artists have good reason to be concerned and want some clarification, according to Ebersole, who sent out an email. SEC Chair Gensler has made broad remarks about the agency’s jurisdiction over cryptocurrencies and the agency has obtained settlements in previous lawsuits against NFT initiatives.
Are tickets for Taylor Swift securities?
Although Mann and Frye are not the same as singer Taylor Swift in many aspects, their attorneys argued that both parties are in the exact same situation with regard to the case.
The attorneys claimed that Swift makes promotional statements, releases new music, and highlights other facets of her ecosystem in addition to the possibility of financial gain for those who purchase her tickets and music.
Imagine if the SEC ordered the destruction of Taylor Swift songs or memorabilia because it determined that they were securities (or would have been if they had only been issued in NFT form). It seems improbable. However, the attorneys said that Impact Theory and SC2 had experienced just that.
On Monday, organizations and leaders in the cryptocurrency space backed the complaint on Twitter.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
