Kraken Withdraws from NFT Marketplace Amid OpenSea’s SEC Investigation
Kraken, one of the largest cryptocurrency exchanges, has decided to close its NFT marketplace to focus on upcoming projects.
Effective November 27, 2024, users will no longer be able to list, bid, or sell items on the platform. The marketplace will be completely shut down on February 27, 2025, allowing users only to withdraw their assets.
Kraken explained that the decision was made to prioritize other projects. NFT marketplace closure will facilitate the shift of more resources into new products and services, including undisclosed initiatives currently in development,” as per a statement from a Kraken representative.
The exchange assured users that its team would support them in transferring NFTs to their Kraken Wallet or a self-custodial wallet of their choice.
Kraken initially announced plans for its NFT marketplace in December 2021, launching the platform in beta by November 2022. Despite high expectations initially, the marketplace struggled to maintain momentum amidst a broader decline in NFT sales.
Weekly NFT trading volumes have not exceeded $200 million since April 2024, according to data from The Block’s Data Dashboard, with most of the market remaining stagnant except for occasional spikes for specific projects like CryptoPunks.
This decision comes shortly after NFT marketplace OpenSea received a Wells notice from the U.S. Securities and Exchange Commission (SEC), indicating a potential enforcement action from the regulator.
OpenSea CEO Devin Finzer stated that OpenSea will challenge the notice and has committed $5 million for legal fees for NFT creators and developers facing similar notices. He emphasized that every creator, regardless of size, should be able to innovate without fear.
Finzer referenced a lawsuit filed by two NFT artists in Louisiana seeking clarity on their projects’ classification as securities, highlighting how regulatory uncertainty could discourage digital art production.
Receipt of a Wells notice by OpenSea indicates the SEC’s possible consideration of NFTs as securities, entering ambiguous legal territory. This follows the SEC’s actions against NFT projects like Impact Theory and Stoner Cats in 2023 for alleged securities law violations, which were settled, but caused uncertainty and unease in the NFT community.
The recent enforcement actions, as well as class-action lawsuits against other NFT companies, have led to caution among creators and businesses. For instance, DraftKings recently ceased its NFT operations, attributing it to “recent legal developments.”
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