KEY POINTS
- Frye and Mann filed the complaint to ask whether the SEC should regulate 'art'
- They accused the SEC of waging a 'campaign to assert jurisdiction over sales of digital art'
- Several industry figures have expressed support for Frye and Mann's legal battle
Two nonfungible token (NFT) artists have filed a complaint against the U.S. Securities and Exchange Commission (SEC), asking the court to provide clarity about whether NFTs fall under the jurisdiction of Wall Street's largest regulator.
A case of 'art'
Law professor Brian Frye and Jonathan Mann, the songwriter of "Song a Day Mann," filed the lawsuit Monday, with their lawyers saying the complaint is "about art." The complaint asked the court to clarify whether the SEC should regulate art and whether artists were supposed to "register" their artworks before selling the pieces to the general public.
The complaint also asked whether artists should be "forced to make public disclosures about the 'risks' of buying their art," and whether artists should be "required to comply" with federal securities laws. "It would have been ridiculous" to require great American artists such in the past to register their paintings, the filing noted.
The plaintiffs alleged that the SEC has waged a "campaign to assert jurisdiction over sales of digital art, which should ring alarm bells for every artist and patron in America." The lawsuit reiterated that Frye and Mann were artists who create art to be sold in the form of NFTs, which the plaintiffs' lawyers described as "digital assets that can take the form of art, music, videos, and in-game items, among many other things."
Mann has released a video featuring his journey of filing the complaint against SEC.
I've been writing a song a day for 16 years and 211 days.
— 16 years of song a day (@songadaymann) July 29, 2024
Today, I’m suing the SEC.
(Yes, this is real) pic.twitter.com/QubAgbltr0
Crypto rallies in support of Frye and Mann
Some of the cryptocurrency industry's experts have taken to X to express support for the artists, including Katherine Minarik, the chief legal officer of Uniswap Labs, the company behind the Uniswap Protocol.
Minarik noted that the SEC has become "broken" enough in its "arbitrary and unlawful" application of securities laws that artists are now "compelled" to file a lawsuit so they can protect their livelihoods.
Wow. We have reached the point where the SEC’s application of securities laws is so arbitrary and unlawful that *artists* are compelled to sue the SEC directly in order to protect their livelihoods. The SEC is broken. (And fwiw I have thoroughly enjoyed many of these songs!) https://t.co/F6mfq2LJ6g
— Katherine Minarik (@MinarikLaw) July 29, 2024
The Blockchain Association, a collective crypto group that includes some of the biggest digital asset firms, asserted that the SEC has no authority over NFT art. "We support the plaintiffs in their quest for legal clarity," the group said.
2/ The SEC does not have authority over NFT art. And it is unreasonable to expect musicians, designers, and other artists to hire lawyers to weigh in on whether art sales will be considered a securities offering by the SEC.https://t.co/zAN8aPg1sx
— Blockchain Association (@BlockchainAssn) July 29, 2024
Bob Summerwill, the executive director of the ETC Cooperative, said Frye and Mann have taken on a "noble fight."
Oh wow.
— Bob Summerwill (@BobSummerwill) July 30, 2024
Well all the very best wishes to you.
A noble fight and you have a fantastic lawyer in @ohaiom!
NFTs still of interest
News of the lawsuit came as NFTs retain the interest of investors, even as other tech sectors appear to have become the new thing and sales declined. The latest data showed that investors are still heavily invested in NFTs as new artists and derivative products continue to emerge.
