Artists Sue SEC Over Confusing Security Status of NFTs

Law professor and filmmaker Brian Frye and songwriter Jonathan Mann are suing the SEC to determine whether NFTs fall under the government agency's authority.

Filmmaker Brian Frye and songwriter Jonathan Mann are suing the United States Securities and Exchange Commission (SEC) to determine whether non-fungible tokens (NFTs) fall under the agency's jurisdiction and to clarify the application of securities laws to NFTs.

The artists' lawyers are seeking to establish clear guidelines on which actions would trigger securities laws regarding minting and selling art NFTs. They used Taylor Swift tickets as an example, arguing that classifying NFTs as securities would be illogical.

"If you buy a ticket to a Taylor Swift concert and decide to resell it at a higher price, that doesn't make you a securities dealer," Mann's lawyer said. "But if you buy an NFT of her singing 'Blank Space' and resell it, the SEC says you might be a securities dealer."

The SEC has not yet commented on the lawsuit.

Betting platform DraftKings is winding down its NFT business following legal developments. On July 31, the company reportedly told users it would discontinue its NFT marketplace and fantasy sports game Reignmakers.

"After careful consideration and in light of recent legal developments, we have made the difficult decision to wind down our Reignmakers NFT product and close our NFT marketplace," DraftKings said in an email to users.

The announcement comes four weeks after a judge denied the company's motion to dismiss a class-action suit alleging that their NFTs were unregistered securities. The lawsuit was filed in March 2023.

"We remain excited about the potential of Web3 and will continue to explore new and innovative ways to engage with our customers in the evolving digital landscape," DraftKings said.

Non-fungible tokens (NFTs) are set to record their lowest monthly volume of 2024 in July. With only $393 million in recorded sales volume, NFTs are about to break the $438 million record set in June for the lowest monthly volume in NFT sales in 2024.

Despite experiencing lower volumes, digital collectibles saw increased transaction volumes for the month. CryptoSlam data showed that almost 10 million NFT transactions occurred in July, a 73% increase from June's record of 5.7 million transactions.

"This increase in transactions can be attributed to several factors, including the launch of new NFT projects, such as the highly anticipated DigiDaigaku PFP (profile picture) project by Limit Break, which generated over $70 million in sales within 24 hours of its launch," the NFT data aggregator said.

"Other notable NFT collections that contributed to the overall sales volume include NBA Top Shot, Bored Ape Yacht Club, and CloneX, each generating over $20 million in sales during the month of July."

NFT gaming platform Ronin recorded 2 million daily active users on July 29, outpacing major blockchains in user activity on the day. The network surpassed other active chains like Tron and Solana, which had 1.8 million and 1.2 million active users, respectively.

In its mid-year review, the Ronin network highlighted factors that may have influenced the increase in active users. According to the report, this may have been partly driven by a surge in volume for its NFT marketplace, Mavis Market and many other ecosystem updates.

"We believe that this increase in activity is a testament to the strength and dedication of our community, and we are excited to continue building and growing together in the second half of the year," the network said.

"We would like to thank all of our users for their support, and we look forward to an exciting and prosperous future together."

Gaming firm Atari's Web3 venture AtariX is bringing its classic games to the layer-2 network Base, starting with its shooter game Asteroids. The company said it would bring more games to the blockchain but did not specify which games would be next.

"Atari is bringing its beloved retro games to Base, starting with Asteroids," AtariX announced on Friday. "Play the iconic game and compete against fellow players on an online leaderboard."

"Mint an access pass to play Asteroids for free or play through AtariX to earn rewards like a $1,000 Atari gift card. Non-custodial wallets are supported."

Users who want to play can mint an NFT access pass, which allows them to compete against other players in an online leaderboard. While the game can be played for free online, players who play through AtariX can get rewards like a $1,000 Atari gift card.