Announced in a September 13 post on X (formerly Twitter), the $6 million fund is backed by venture capital firm a16z and NFT marketplace OpenSea.
Coinbase Creates NFT Legal Defense Fund as SEC Crackdown Intensifies
The initiative comes in response to increasing regulatory scrutiny, including a Wells notice issued to OpenSea by the US Securities and Exchange Commission. Stand With Crypto highlighted the need to defend the crypto community, stating that creatives can now challenge “misguided actions from the SEC.”
“With the SEC issuing OpenSea a Wells notice, as well as other attacks on artists and creators, it has become clear that those looking to build on blockchain technology will continue to face significant legal threats and challenges,” the firms stated.
The fund is supported by leading law firms such as Fenwick & West LLP, Goodwin Procter LLP, and Latham & Watkins LLP, providing critical legal resources to those in the blockchain and NFT space. According to the statement, a16z contributed $1 million to the Creator Legal Defense Fund, while OpenSea pledged $5 million.
The SEC faces ongoing criticism from the crypto community and US lawmakers for its “regulation by enforcement” approach. In 2022, the agency initiated its first action against an NFT issuer, accusing a Los Angeles-based media company of selling unregistered securities through NFTs, leading to a $6 million settlement.
The regulator has also targeted major crypto platforms, including Coinbase, Binance, and Kraken, accusing them of violating securities laws. The SEC stated that crypto investors should receive the same protections as traditional ones, even if they trade through intermediaries.
In response, Coinbase has positioned itself as a leading advocate for the crypto sector. In 2023, it launched the Stand With Crypto initiative and contributed millions to Fairshake, a political action committee that supports the crypto industry. These efforts demonstrate Coinbase's commitment to advancing favorable policies and safeguarding the rights of crypto investors.
Current events are unfolding amid a notable downturn in the NFT sectort. After experiencing a surge during the crypto bull market in 2021, interest in NFTs has sharply declined.
A recent report revealed that 96% of NFT projects are dead. The ongoing issues like rug pulls and wash trading have led to declining trust in the NFT space. Unfair regulatory pressure could further exacerbate these problems, potentially worsening the trend.
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