Faced with a sharp drop in NFT trading volumes, it is preparing to launch a revamped platform in December to regain its position in the market.
CEO Devin Finzer spoke about the new marketplace on The announcement comes almost a year after OpenSea laid off half of its employees and began work on what Finzer called “OpenSea 2.0.”
Once the leader in the NFT market, OpenSea OpenSea lost massive ground to rival platform Blur in late 2022. Blur attracted users by offering sophisticated trading tools and token rewards, moving NFT traders away from the purchase format and base sales of OpenSea. Despite some recent recovery in market share, OpenSea has faced a general market downturn, with trading volumes hitting their lowest level in over three years.
In early 2023, monthly trading volumes for Ethereum-based NFTs OpenSea's revenue reached $868 million, but it has since dropped to just $136 million last month. OpenSea's upcoming overhaul, which includes a waitlist for early access, signals an effort to more closely align with traders' demand for advanced features and user incentives, a strategy that Blur has successfully used to disrupt the market.
The news comes nearly two months after OpenSea received a Wells Notice from the US Securities and Exchange Commission (SEC), indicating the regulator's intention to take enforcement action.
OpenSea CEO Devin Finzer said the SEC believes NFTs on its platform can be considered securities.
A Well Notice is a preliminary warning that informs recipients of potential charges that could be brought against them, usually leading to enforcement action.
Finzer said OpenSea would contest the notice and pledged $5 million to cover legal fees for NFT creators and developers who may receive similar notices. He added that “every creator, big or small, should be able to innovate without fear.”
OpenSea's receipt of a Wells notice suggests that the SEC may consider NFTs to be securities, thus entering legally uncharted territory. This comes after the SEC took action against NFT projects like Impact Theory and Stoner Cats in 2023, accusing them of violating securities laws. Both cases were settled, but the actions caused uncertainty and concern within the NFT community.
Recent enforcement actions, as well as class action lawsuits against other NFT companies, have caused hesitation among creators and businesses. For example, DraftKings recently shut down its NFT business, citing “recent legal developments.”
Finzer referenced a lawsuit filed by two NFT artists in Louisiana seeking clarification on whether their projects would be considered securities, arguing that regulatory uncertainty could deter creators from producing digital art.
The SEC has also filed lawsuits against other crypto entities, including issuing a Wells Notice to Coinbase in March 2023 and scrutinizing DeFi protocol Uniswap and Robin Hood for securities violations.
