Two NFT artists took the issue of the unclear regulatory framework for their art form to court earlier this week.
Jonathan Mann and Brian Frye filed a lawsuit against the Securities and Exchange Commission. They argue in a Louisiana filing that Andy Warhol, Georgia O’Keeffe and other artists never had to be concerned about regulators saying their artwork was an investment contract.
“It would be crazy to think that Bob Dylan, Janis Joplin, the Rolling Stones, Ray Charles, Jimi Hendrix, Madonna or Louisiana’s own Louis Armstrong should have retained attorneys to examine the SEC’s Form S-1 to see how to register their music for sale to the general public,” The complaint stated.
Mann informed Blockworks of the origins of the suit “deep frustration” Lack of Clarity Mann thought that the anti-crypto march of regulatory agencies had already focused on two NFTs, Stoner Cats, and Impact Theory. He felt his NFTs could be a follower in Stoner Cats’ footsteps.
You can read more in our opinions section. The SEC war against cryptography must end.
It is important that the artists get answers to their questions from SEC before they can be taken into account by the agency.
Mann has been writing and releasing a new song every day for the past 16 years. He told Blockworks that he has been involved in the NFT space since 2017 — way before the 2021 boom that probably put such things on the SEC’s radar.
His project has penned multiple songs about the SEC — including one earlier this week detailing his plans to sue the SEC — and one from September of last year about the SEC’s actions against Stoner Cats. The Mila Kunis-assisted project, which was backed by Ashton Kutcher and Mila Kunis last year paid $1,000,000 to settle the SEC’s claims and destroyed NFTs that were in their possession.
“As I looked at what they said Stoner Cats had done, and I looked at what I continually do on a daily basis, [I realized] there’s no daylight here between what they’re accusing them of and what I do and what basically everyone that I know in the space, artists and creators of all kinds, are doing all the time,” Mann tells Blockworks.
Mann claimed that SEC’s actions might discourage artists to seek a livelihood. “direct relationship” With clients.
“It’s very ironic to me because in a lot of ways, I think of NFTs as the most…direct relationship that I can have with people who enjoy my music. Any other way that I could sell songs to folks would be mediated in one way or another by either a giant tech company or a payment processor who would take a cut,” He said.
“I would have to interact with these huge multinational corporations. [But] when I’m selling NFTs, it’s literally just me and them mediated by the blockchain which belongs to no one … I find it ironic like this way of interacting with my fans is somehow deemed more harmful by the SEC than you know what Spotify does to artists or YouTube does to creators, or Tiktok, or any of these things where creators are just screwed at every turn. And yet, that’s just deemed normal,” Mann continued.
Jason Gottlieb was hired to assist Frye and Mann in their fight against the Securities Regulator. He also represented Debt Box, in a now-infamous lawsuit.
“The SEC has been engaged in strategic ambiguity,” Gottlieb told artists that they have two options after the agency failed to clarify its regulatory policy or take legal action. “produce their art and risk that they wake up needing to hire very expensive securities lawyers.”
“Of course, the easy way not to cower in fear of getting sued by the SEC is just to follow all the securities laws, but those laws apply to people who are in the securities or investments business, and not it should apply to musicians and artists,” Gottlieb continued.
You can read more in our opinions section. Blockchain could teach the music industry a thing or two
The SEC has been sued in a few cases due to growing frustration with crypto. Indeed, it’s a heavily discussed topic — even going so far as being an important talking point in Coinbase’s earnings call late Thursday.
“As we go [into] this new digital era where most assets with value are digital — and most assets that don’t have intrinsic value but have artistic value or digital — there’s a question of how, if at all, they should be regulated,” Gottlieb tells Blockworks.
“So my interest in digital assets and the SEC and securities law is intersecting here, along with … protecting the next generation of creators, designers, musicians and artists to help them make digital art free from concerns that all of a sudden, some random federal agency tasked with regulating securities and exchanges is going to show up and say, ‘Hey, that song that you’re trying to sell, that’s a security,” He clarified.
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