Plaintiffs Anthony Shnayderman and Itai Bronshtein have voluntarily withdrawn their complaint filed against Ozone Networks, which operates the OpenSea trading platform. Marketplace clients made the decision after Judge Cecilia Altonaga allowed OpenSea to submit the case to arbitration. This is an alternative dispute resolution process that takes place in private: faster and at a lower cost than regular court proceedings.
This implies that a class action lawsuit will not be able to set a precedent that could have a broad impact on the NFT market.
OpenSea said its customer plaintiffs agreed to its terms that all claims could be resolved in arbitration. Plaintiffs’ attorney Adam Moskowitz explained that the plaintiffs “had no choice but to dismiss the litigation.”
Users sued OpenSea in September, saying NFTs they bought on the platform turned out to be unregistered investment contracts and were therefore worthless in the United States due to their “illegal nature.” The plaintiffs mentioned that in August the US Securities and Exchange Commission (SEC) threatened the platform that it could sue it for trading in digital art.
Given that OpenSea could be in trouble, Schneiderman and Bronstein took advantage of the situation and also complained about the platform. In the lawsuit, they cited the SEC’s successful actions against NFT projects Stoner Cats 2 and Impact Theory, where non-fungible tokens were recognized as unregistered securities.
Last November, OpenSea was forced to lay off half of its employees, and in January, platform co-founder Devin Finzer announced his readiness to sell the company due to declining trading volumes.
Source: Bits
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