OpenSea users drop $54M suit after arbitration ruling

Two OpenSea users, Anthony Shnayderman and Itai Bronshtein, have withdrawn their proposed class-action lawsuit accusing the NFT marketplace of selling unregistered securities.

The decision came after Judge Cecilia Altonaga allowed OpenSea to demand arbitration, which led to the voluntary dismissal filed on November 7 in a Florida federal court.

The lawsuit, launched in September, argued that the NFTs purchased on OpenSea were unregistered securities and worthless due to their "illegal nature."

Shnayderman and Bronshtein’s claim cited OpenSea’s August disclosure of a Securities and Exchange Commission (SEC) Wells notice, suggesting the platform could face liability for facilitating the trade of unregistered securities.

The plaintiffs referenced the SEC's actions against NFT projects such as Stoner Cats 2 and Impact Theory as examples of regulatory enforcement in similar cases.

OpenSea’s response maintained that the users agreed to the platform’s terms of service, which stipulate arbitration for all claims, including whether claims are arbitrable.

In an October filing, OpenSea asserted its intent to compel arbitration and appealed any denial by a court, effectively pausing the case.

Adam Moskowitz, representing Shnayderman and Bronshtein, noted that they “had no choice but to dismiss the pending case.”

He added that the case aimed to “create a framework” for experts to build a global marketplace for NFTs amid evolving political and legislative landscapes.

He also emphasised the importance of platforms like OpenSea in supervising and monitoring NFT transactions for which they profit.

While OpenSea labeled the initial suit “baseless” and stated that creating a lawsuit from its SEC disclosure wouldn’t validate the allegations, it did not respond immediately to comments on the case's dismissal.

The outcome underscores ongoing complexities as the NFT market navigates regulatory scrutiny and user protection.