SEC Closes OpenSea Investigation, Drops Coinbase Lawsuit

The US Securities and Exchange Commission (SEC) is closing its investigation into OpenSea and has dropped its lawsuit against Coinbase.

OpenSea founder and CEO Devin Finzer made the announcement on X, describing it as a "win" and that the regulator's initial attempt to classify NFTs as securities "would have been a step backward—one that misinterprets the law and slows innovation."

In August, the SEC sent OpenSea a Wells Notice on the claim that NFTs on its platform are securities. A Wells Notice is usually sent ahead of launching a formal lawsuit. Coinbase, Uniswap Labs, Ripple, Robinhood, Consensys, and BUSD issuer Paxos are among those in the increasing list of crypto firms that have received such notices.

Finzer said at the time that OpenSea is "Shocked the SEC would make such a sweeping move against creators and artists," and that the company will "stand up and fight," pledging $5 million to cover legal fees for NFT creators and developers who might also be issued with a notice.

Even competitor Magic Eden lauded the SEC's decision to drop its case against OpenSea. "While we are competitors in the trenches, we share a deep belief in NFTs and what they will enable,” Chris Akhavan, the chief business officer of NFT marketplace Magic Eden said.

The move also coincides with the SEC agreeing to drop its lawsuit against Coinbase in what the exchange described as change in “political leadership” at the agency.

According to Coinbase’s chief legal officer, Paul Grewal, the SEC has agreed “in principle” to dismiss the lawsuit, which accused the exchange of failing to register as a securities platform. The SEC will now vote on dismissing the lawsuit at some point this week.

The regulator sued Coinbase in June 2023 on the basis that Coinbase was operating as an unregistered securities exchange, broker, and clearing agency.

Earlier this month, the agency submitted a request to ask a federal appeals court for a four-week extension to respond to Coinbase's ongoing appeal.

Coinbase had challenged a decision by District Judge Katherine Polk Failla, who found the SEC had presented a plausible case that Coinbase sold unregistered securities. The exchange is seeking judicial clarity on how securities laws apply to crypto.

Grewal suggested that a shift in leadership played a role in the SEC’s decision, hinting at changes in regulatory priorities under a new administration, noting “what changed over those two years was the political leadership at the SEC,” implying that the agency’s regulatory stance has softened under President Donald Trump.