Jonathan Mann, known for creating a song every day for sixteen years, and conceptual artist Brian L. Frye have filed a lawsuit against the US Securities and Exchange Commission (SEC). The case centers on whether NFTs representing digital art, such as those created by Mann and Frye, should be classified as securities under U.S. law. Mann, who has written some of the most iconic crypto-related songs in the industry, wrote in protest: “This song is a security.”
I’ve been writing a song every day for 16 years and 211 days.
Today I’m suing the SEC.
(Yes, this is real) pic.twitter.com/QubAgbltr0
– 16 years of singing a day (@songadaymann) July 29, 2024
Mann and Frye argue that their digital artworks, sold as NFTs, should not be subject to the extensive regulatory framework designed for traditional securities. Mann plans to release a collection of 10,420 NFTs featuring unique remixes of his song “This Song Is A Security.” By comparison, Frye plans to offer 10,320 NFTs under its “Cryptographic Tokens of Material Financial Benefit” project.
Mann wrote in a statement:
“Now I’ve remixed that song specific to the purpose of this lawsuit. I recorded roughly 300 layers that are programmatically combined into a total of 10,420 individual, unique remixes. This is the basis of an NFT project that I am filing with the court[…] The project cannot be released until the court rules in our favor.”
The plaintiffs allege that the SEC’s recent actions against other NFT projects, including the Stoner Cats and Impact Theory cases, improperly extend securities regulations to digital art. They emphasize that the SEC’s broad interpretation of the Howey test — used to determine what constitutes an investment contract — threatens to encompass all forms of art and collectibles, not just NFTs. Mann and Frye are seeking legal clarification to ensure their art projects can proceed without being classified as securities, potentially avoiding costly regulatory compliance or legal challenges.
The artists are concerned that the SEC’s approach, which lacks clear guidelines, could undermine creativity and innovation in the digital art space. They argue that selling art, whether physical or digital, should not require compliance with securities laws just because the artworks might increase in value.
Mann further noted:
“NFTs have become a joke lately. It feels like 2017. Hardly anyone thinks there is anything worth pursuing. But I still believe in NFTs! Beyond the hype of 2021 and after the fallow period we are in now, the core idea that initially excited me still exists.”
Mann and Frye’s lawsuit reflects broader concerns within the digital art community about increasing SEC scrutiny and the uncertain legal landscape surrounding NFTs. They argue that, without clear boundaries, the SEC’s expansive view of its regulatory authority could have a chilling effect on artists’ ability to navigate new technologies and monetize their work.
The outcome of this case could set an important precedent for the treatment of NFTs under U.S. securities laws, potentially impacting a wide range of digital artists and collectors.