OpenSea to Launch Revamped NFT Marketplace in December, Faces SEC Scrutiny

Facing a steep drop in NFT trading volumes, OpenSea is set to launch a revamped platform in December to reclaim its position in the market.

OpenSea, the once-dominant NFT marketplace, is preparing to launch a revamped platform in December, aiming to regain its lost market share and cater to the evolving demands of NFT traders.

The news of OpenSea's upcoming overhaul emerged from an interview with CEO Devin Finzer, who teased the launch on X, a members-only publication by Not Boring.

“We’ve been quietly cooking at OpenSea… we built a new OpenSea from the ground up,” Finzer said in the interview.

The announcement comes almost a year after OpenSea laid off half of its workforce and began work on what Finzer called “OpenSea 2.0.”

During that time, the marketplace lost significant ground to rival platform Blur, which quickly became the top destination for NFT traders. Blur offered advanced trading tools and token rewards, drawing users away from OpenSea's more basic buy-and-sell format.

Despite some recent recovery in market share, OpenSea has struggled with the overall market downturn, which saw trading volumes hit their lowest in over three years.

In early 2023, monthly trading volumes for Ethereum-based NFTs were as high as $868 million, but they have since plummeted to just $136 million last month, according to Dune Analytics data.

OpenSea's upcoming overhaul, which includes a waitlist for early access, appears to be an effort to align more closely with traders' demand for advanced functionality and user incentives—a strategy that Blur used successfully to disrupt the market.

The news of OpenSea's platform update comes as the marketplace is also facing scrutiny from the U.S. Securities and Exchange Commission (SEC).

In April, OpenSea disclosed that it had received a Wells notice from the SEC, indicating the regulator's intent to pursue an enforcement action.

The SEC notice pertains to whether NFTs on the platform may be considered securities, a matter that has been the subject of increasing discussion and legal actions.

A Wells notice is a preliminary warning that informs recipients of potential charges that may be brought against them, typically leading to enforcement actions.

“The SEC believes that NFTs on our platform may be considered securities,” Finzer said in a statement.

OpenSea will contest the Wells notice and has pledged $5 million to cover legal fees for NFT creators and developers who may receive similar notices, the CEO added.

“Every creator, big or small, should be able to innovate without fear,” he said.

OpenSea's receipt of a Wells notice suggests that the SEC might consider NFTs as securities, moving into 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.

The recent enforcement actions, along with class-action lawsuits against other NFT companies, led to hesitation among creators and businesses. For example, DraftKings recently shut down its NFT business, citing “recent legal developments.”

Finzer also highlighted 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 pursued actions against other crypto entities, including issuing a Wells notice to Coinbase in March 2023 and scrutinizing DeFi protocol Uniswap and Robinhood for securities violations.”