A Song Man and a Law Professor Walk Into the SEC—And Try to Take Down Its NFT Agenda

Brian Frye, a law professor, and Jonathan Mann, a singer-songwriter, have filed a federal lawsuit against the U.S. Securities and Exchange Commission (SEC) to challenge the agency's stance on NFTs. The SEC has previously sued select NFT projects, labeling them as unregistered securities, without clearly defining what types of NFT projects are legal. Frye, who had set up a trap in 2019 by minting an NFT of a letter declaring his art project as an unregistered security, aims to force the SEC to clarify its position on NFTs through this lawsuit.

The lawsuit follows the SEC's recent action against actress Mila Kunis' NFT-based cartoon series "Stoner Cats," which settled with the agency for $1 million. This case, and others like it, sparked outrage among artists who rely on NFTs for income, including Mann, who decided to take legal action. Teaming up with Frye, Mann hopes to challenge the SEC's authority to regulate their NFT-backed artworks as securities, and in doing so, protect the rights of artists who create and sell NFTs.

Frye and Mann's lawsuit seeks to expose what they see as a fundamental inconsistency in the SEC's approach to NFTs, questioning why certain NFT projects are targeted while others are not. They argue that the SEC's lack of clarity and selective enforcement creates uncertainty in the NFT market. The outcome of this legal battle could have significant implications for the future regulation of NFTs, though Frye and Mann acknowledge that a definitive resolution may require further legislation or a Supreme Court ruling. Nonetheless, both feel a sense of catharsis in confronting the SEC and seeking answers.

For more information see, Sander Lutz "A Song Man and a Law Professor Walk Into the SEC—And Try to Take Down Its NFT Agenda" Decrypt, July 31, 2024.

Special thanks to James Lamm (Minnesota Estate Planning and Tax Attorney) for bringing this article to my attention.