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."

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

OpenSea founder and CEO Devin Finzer announced the news on Monday, calling it a “win” and saying 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."

"The SEC is closing its investigation into @opensea. This is a win for everyone who is creating and building in our space. Trying to classify NFTs as securities would have been a step backward—one that misinterprets the law and slows innovation," Finzer wrote on X.

Every creator, big or small, deserves a fair shot at building the future. We will continue working with regulators to find common ground and create a clear regulatory framework for digital assets. Together, we can unlock the full potential of Web3.

In August, the SEC sent OpenSea a Wells Notice over the claim that NFTs on its platform are securities. A Wells Notice is typically sent before a formal lawsuit is filed.

Coinbase, Uniswap Labs, Ripple, Robinhood, Consensys, and BUSD issuer Paxos are among 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 praised 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.

"We applaud the SEC for reconsidering their approach and ultimately deciding to drop the case against OpenSea. This decision aligns with the vast majority of legal experts and will ultimately benefit the entire NFT ecosystem. We remain hopeful that the SEC will continue to engage in constructive dialogue with the industry to establish clear and reasonable regulatory frameworks for digital assets."

The move also comes as the SEC is set to drop its lawsuit against Coinbase, following what the exchange described as a 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 is expected to vote on dismissing the lawsuit at some point this week.

The regulator had sued Coinbase in June 2023, alleging that the exchange operated as an unregistered securities exchange, broker, and clearing agency.

Earlier this month, the agency requested a four-week extension to respond to Coinbase's ongoing appeal from a lower court decision.

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, and said that "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.