A Song Man and a law professor walk into the SEC and try to undermine the NFT agenda

Five years ago, Brian Frye set an elaborate trap. Now the law professor is teaming up with a singer-songwriter to finally take it to the SEC in a new lawsuit — and prevent the regulator from ever going after NFT art projects again.

Earlier this week, Frye and musician Jonathan Mann filed a federal lawsuit against the U.S. Securities and Exchange Commission, which aims to finally force the agency to state its position on the legal status of NFTs. About And againthe SEC has filed suit against select NFT projects that it considers qualify as unregistered securities – but the regulator has never defined which types of NFT projects are legal and which are not. cold about the emerging industry.

The unusual story of this week’s lawsuit begins in 2019, when Frye, a securities law expert and fan of new technologies, published an NFT of a letter he sent to the SEC stating that he art project constitute an illegal, unregistered security. Like the conceptual art project was not a security, Frye challenged the agency, but then it had to say so.

The SEC never responded to Frye – not then, nor after several more self-incriminating correspondences from the professor. But over time, the agency began vigorously pursuing and suing NFT projects.

Last September, the regulator came after actress Mila Kunis’ NFT cartoon series Stoner cats, many artists who rely on revenue from NFT sales were concerned. Jonathan Mann, a musician who has been writing a new song every day since 2009, was one such artist. But he wasn’t just worried, he was furious.

“Every time I talk to the Stoner Cats people, or other people who have been affected [by the SEC]there’s steam coming out of my ears,” better known as Mann “Song A Day Mann,” told Declutter. “I feel physically angry.”

Stoner Cats, an animated film web series developed by Mila Kunis with the vocal talents of several A-list actors and Ethereum creator Vitalik Buterin, it sold NFT passes required to view the program. The makers of Stoner Cats eventually reached a $1 million settlement with the SEC without admitting wrongdoing, but the lawsuit virtually brought the project to a halt. another NFT-powered series powered by Kunis.

On the same day as the Stoner Cats settlement, Mann posted a new tune titled ‘This song is a certainty.’ (He’s a fast writer.) Mann decided then and there to fight back against the SEC and defend his right – plus the rights of other artists like him – to earn income through the sale of NFTs. That would mean voluntarily sticking his head out of the ground and challenging the agency head-on, despite the fact that the Commission has not yet charged him. But Mann felt he had no other choice.

“Nobody wants to be under the eye of the SEC,” he said. “But I feel like our cause is so righteous, so clear to me, that it seemed like a no-brainer.”

Mann soon came into contact with a legal team deep-rooted in the cryptoverse who liked the idea of ​​forcing the SEC’s hand with a preemptive lawsuit regarding its NFT policies. All they needed was a claimant. Frye, who had been salivating for such an opportunity for half a decade, was a natural choice.

“Historically, the SEC has always been able to choose its own defendants,” Frye said Declutter. “So they went after people like Stoner Cats because they knew they could portray Stoner Cats in a bad light. They knew they could get them to settle down.”

But now Frye and Mann are drawing the battle lines. In the court case filed against the SEC in Louisiana earlier this week, they challenged the SEC’s position to regulate their NFT-backed artworks as securities, demanding that the agency declare that their respective art projects do not constitute an illegal, unregistered securities offering.

Mann even commemorated the occasion with a new song (minorous as a NFTof course) with the caption “I’m suing the SEC.”

“For example, I didn’t grow up with a distant dream… of one day suing a government agency,” goes the upbeat anthem. “But there is a rogue supervisor who is up to no good… He is doing his utmost to ruin my livelihood.”

Essentially, Frye argues, there is a gaping logic hole in the SEC’s approach to NFTs. For decades, as Frye has long done emphasizedthe regulator has refrained from regulating the art market, even pieces that are routinely bought as a store of value and sold in series of identical or near-identical derivatives.

So what about putting such works of art into the chain that would automatically make them effects? And why should only some NFT projects fall under the SEC’s authority, while others do not?

“I don’t think they want to say the quiet part out loud, which is, ‘We can arrange whatever we want,’” Frye said.

So the law professor is quite excited at the prospect of finally forcing the SEC to explain the contours of its NFT policy in federal court.

“I think it will be very difficult for them to do,” he said.

While this week’s trial represents an exciting and long-awaited intellectual battle with the American state for Frye, its significance is a little more existential for songwriter Mann.

“I want to know, for myself and for anyone I know who is trying to make a living creating NFTs, that what we’re doing is not going to appeal to Sauron’s eyesaid Mann, checking the name of the all-seeing, all-destroying, all-powerful villain The Lord of the Rings fame.

The lawsuit does not guarantee a definitive end to the issue of NFT regulation, both readily admit. This is only possible with concrete legislation or a ruling by the Supreme Court.

Either way, the professor and the musician both feel catharsis — albeit for slightly different reasons — at the prospect of finally taking the SEC’s seemingly contradictory stance on NFTs to court.

“This is a very deep, profound, existential, ontological problem that has to be solved somehow,” Frye said. ‘I’m not saying I know what the right answer is. I’m just saying there has to be an answer.”