If the SEC Sues OpenSea, Here's Why the NFT Platform Could Win Easily - Ep. 696
The SEC’s latest enforcement action is targeting NFTs, and OpenSea is in the crosshairs. In this episode, crypto lawyer Preston Byrne joins to unpack the implications of the SEC's Wells Notice to OpenSea and what it might mean for the platform and the broader NFT market. Could Section 230 of the Communications Decency Act provide a unique defense for OpenSea? Preston also dives into other recent SEC moves, including cases against Stoner Cats, Impact Theory, and more.
Lastly, with the 2024 elections looming and political divides sharpening, is the SEC overreaching in its approach to crypto?
Show highlights:
Why Preston believes that the SEC will go after OpenSea for being an unregistered securities exchange
What the Stoner Cats case was about and why it was not a strong enforcement action, according to Preston
Why OpenSea's defense against the SEC may hinge on Section 230 protections for user-generated content, setting it apart from traditional exchanges like Coinbase or Binance
How the clear-cut promises made by Impact Theory about potential returns made their NFTs resemble securities, unlike the typical art-focused NFTs on OpenSea
Why Nate Chastain’s NFT insider trading case is unlikely to impact the SEC’s potential lawsuit against OpenSea
Whether the $4 million settlement by Dapper Labs over NBA Top Shot NFTs likely represents little relevance to OpenSea's SEC issues
What a Wells notice signals about the SEC's likelihood of suing OpenSea and why they might feel confident about winning this case
How Jonathan Mann and Brian Frye's lawsuit for clarity on NFTs as securities highlights the SEC's potentially overreaching stance in its possible case against OpenSea
How Trump's careful language around his NFT collection likely minimizes SEC risk by avoiding investment promises and focusing on their use as digital collectibles
Whether the SEC's actions could reinforce the divide among crypto voters, with Trump promising a crypto-friendly stance and Harris likely continuing a more adversarial approach
Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com
Thank you to our sponsors!
iTrustCapital
Polkadot
Token 2049
Mantle’s FBTC
Gemini
Guest
Preston Byrne, Managing Partner at Byrne & Storm
Links
Wells notice
Original announcement by X by OpenSea’s CEO Devin Finzer
Unchained: OpenSea's Wells Notice From the SEC Could Prove ‘Disastrous’
Recent cases
Unchained: Are NFTs Securities Offerings? Two Artists Sue the SEC to Find Out
The Defiant: NFTs Are Securities? All Eyes Turn to Top Shot Case
Reuters:
US regulator fines Stoner Cats creator for offering NFTs
Ex-OpenSea manager sentenced to 3 months in prison for NFT insider trading
Hester Peirce’s dissent on the Stoner Cats case
Others
Paper: The Economic Reality of NFT Securities.
Mondaq: Defining NFTs: Property, Securities, Or Commodities?
National Post: Trump’s newest NFTs show him as superhero, boxer and motorcyclist
Timestamps:
00:00 - Introduction
02:11 - SEC targets OpenSea: Unregistered exchange?
03:58 - Stoner Cats case: Weak for SEC?
07:42 - OpenSea's defense: Section 230 protections
13:15 - Impact Theory's promises vs. OpenSea's NFTs
15:34 - Nate Chastain's case
17:15 - Dapper Labs settlement: Relevance to OpenSea
18:56 - Wells notice: SEC's confidence to sue
19:48 - Mann & Frye's lawsuit: SEC overreach?
22:39 - Trump’s NFT strategy: Minimizing SEC risk
24:53 - What this Wells notice says about the presidential election
58:25 - News Recap
Learn more about your ad choices. Visit megaphone.fm/adchoices
The Skeptics' Episode: Preston Byrne and Angela Walch on What the Industry and Regulators Get Wrong in Crypto
Preston Byrne, an independent consultant and English lawyer, and Angela Walch, an associate professor at St. Mary’s University School of Law who focuses on blockchain technology, both explain their criticisms of the crypto space, give grades to regulators on their job so far, and how they think major players in the space can improve. They discuss what systemic risks they believe crypto could pose to the wider financial system, how the current activity in the space is accruing "legal debt," and what it's like being a critic in a land of believers.
Preston Byrne: https://prestonbyrne.com/
Angela Walch: https://law.stmarytx.edu/academics/faculty/angela-walch/
Sponsored by Preciate: https://preciate.org/ for https://preciate.org/recognize/ and StartEngine: http://startengine.com/ for https://www.startengine.com/pages/summit
Learn more about your ad choices. Visit megaphone.fm/adchoices
Preston Byrne - Crypto-pocalypse - [Invest Like the Best, EP.72]
My guest this week is Preston Byrne. Preston is vocal critic of crazy prices and projects in the world cryptocurrencies. His background is in the legal world and also as a founder and former COO of Monax, which made the first open-source permissioned blockchain client.
As Preston says, he is a “blockchain without bitcoin” guy, who believes that this crypto mania will end in some sort of apocalypse for token holders and ICO issuers .
We tackle several issues, from his broad skepticism of crypto assets, to the potential regulatory reaction from major governments, to types of coins like stable coins, which Preston views as analogous to perpetual motion machines.
Please enjoy our conversation and for any crypto investors out there, let me know if this conversation affects your opinion of the investing prospects for cryptocurrencies.
Hash Power is presented by Fidelity Investments
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Links Referenced
Bitcoin white paper
The Bear Case for Crypto
Hash Power series
Zero Hedge
Preston tweet on Reverse network effect
Show Notes
2:12 - (First Question) –Ponzi scheme vs pyramid scheme vs Nakimoto scheme
5:29 – Why there are regulatory challenges to cryptocurrency
5:33 – The Bear Case for Crypto
9:59 – Who are the most influential people supporting this and how are they swaying the regulatory minefield on this issue
10:28 – Hash Power series
13:23 – Looking into the idea of a digital asset and the difference between blockchain and the token itself
16:09 – What about the idea that cryptocurrency’s only feature is that it’s censorship resistant
18:39 – Why cryptocurrencies become less usable the more successful they are
18:59 – Zero Hedge
21:04 – Why can’t we rely on offchain solutions to solve the scaling issue
22:29 – The idea of bubbles and what happens next in this one
25:41 – What are the incentives to build technology to support cryptocurrencies
29:23 – Explaining Ripple
31:21 – What would precipitate a massive reversal in the inflated valuations of cryptocurrencies
34:52 – Understanding reverse network effects
34:36 – Preston tweet on Reverse network effect
37:45 – The principles behind Stablecoin
42:20 – What has been the greatest lesson that Preston has learned about blockchain he wish he knew when he first got started
44:05 – How embedded will blockchain be by 2024/2025
45:12 – ICO’s, why Preston is not a fan and if there are any positives to them
50:20 – What are the conditions under which these things will be viewed legally.
54:00 – Preston’s history owning cryptocurrencies
55:35 – What has Preston most excited in the space
59:02 – Utility settlement coin
1:00:36 – Why the fascination with marmots
1:02:10 – What to reference before getting started with cryptocurrencies
1:04:03 – Understanding supply chains in block chain
1:07:14 – Some smart people on block chain to follow
1:08:24 – Kindest thing anyone has done for Preston
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub
Follow Patrick on twitter at @patrick_oshag