OpenSea users drop securities suit after marketplace demands arbitration

As a seasoned analyst with over two decades of experience in the financial industry, I find myself intrigued by this latest development in the OpenSea saga. The voluntary dismissal of the class-action lawsuit against OpenSea by the two plaintiffs seems to indicate a strategic move rather than a concession of guilt.

Originally, two users on the OpenSea platform, who alleged that the non-fungible token marketplace was illegally selling unregistered securities, decided to abandon their planned class-action lawsuit following a court ruling that permitted OpenSea to mandate arbitration. In simpler terms, the users withdrew their lawsuit due to the court’s decision that allowed OpenSea to use an arbitration process instead.

On November 7th, Anthony Shnayderman and Itai Bronshtein chose to withdraw their securities lawsuit against Ozone Networks (operating as OpenSea) in a federal court in Florida. This decision came after Judge Cecilia Altonaga granted OpenSea the right to submit a motion compelling the two parties into arbitration, which she approved last month.

OpenSea maintained their stance that they would require both users to undergo arbitration, citing in a filing from October that they had previously agreed to the platform’s terms of service which stipulate all disputes, even those regarding whether arbitration is necessary or not, should be resolved by an impartial third party.

As a crypto investor, I’ve learned that in the recent October filing, the NFT marketplace stated its intention to swiftly push for the plaintiffs to settle their disputes in the previously agreed-upon forum through arbitration. If any judge denies this request, the marketplace has made clear it will appeal the decision, effectively halting the case temporarily while the legal process unfolds further.

OpenSea users drop securities suit after marketplace demands arbitration

Adam Moskowitz from The Moskowitz Law Firm, who represents Shnayderman and Bronshtein, informed CryptoMoon that “they were compelled to drop the ongoing legal action.

He added their “main goal” for the case was to “create a framework, whereby our experts, and their experts, could accomplish what others have not been able to do, namely, try to create a workable global marketplace for NFTs […] in light of the upcoming changing political and legislative changes.”

Moskowitz stated that OpenSea might still be beneficial, particularly in overseeing and tracking NFTs traded on their platform, as it benefits them directly. He also mentioned that they would continue exploring ways to assist victims of faulty NFTs and other cryptocurrency products more effectively.

In September, Shnayderman and Bronshtein filed a lawsuit they proposed, asserting that the Non-Fungible Tokens (NFTs) they purchased from OpenSea were unregistered securities contracts within the U.S., rendering them worthless because of their allegedly illicit nature.

They contended that OpenSea’s August disclosure of a Securities and Exchange Commission Wells notice, which signaled potential legal action against them, implies that OpenSea could be facing scrutiny and might be held accountable for aiding in the trading of unregistered securities.

The suit additionally highlighted the SEC’s victories against NFT projects Stoner Cats 2 and Impact Theory, stating that these NFTs were not registered securities. It was asserted that the NFT market violated a user agreement by failing to regulate the OpenSea exchange for unregistered securities as promised.

At that point, a representative from OpenSea dismissed the accusations, labeling the lawsuit as “without merit,” and stated to CryptoMoon, “Merely fabricating a supposed class-action lawsuit due to our disclosure of an SEC Wells notice won’t transform the claims in the suit into factual.

OpenSea did not immediately respond to a request for comment on the voluntary dismissal.

2024-11-11 05:43

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