Paradigm Files Amicus Supporting NFT Creators’ Lawsuit Against SEC

Today, Paradigm filed an amicus brief supporting two artists’ attempt to obtain a declaratory judgment and injunctive relief from the SEC in Mann v. Securities Exchange Commission.

Jonathan Mann is a singer, songwriter, and music producer who writes a song a day that he publishes as NFTs. Brian Frye is a law professor and artist who creates conceptual art sold as NFTs. Like many other creators, they would like to launch their NFT projects but have not done so because of the SEC’s enforcement actions in the NFT space. Professor Frye has even sought no-action letters from the SEC to no avail.

For too long, the SEC’s campaign of regulation by enforcement has stifled innovation in the crypto space. As two SEC commissioners themselves noted in their dissent in the Stoner Cats case: “Were we to apply the securities laws to physical collectibles in the same way we apply them to NFTs, artists’ creativity would wither in the shadow of legal ambiguity.”

Paradigm’s amicus brief outlines why the usage of blockchain technology does not magically render swaths of digital creations into investment contracts and how the economic realities of NFT market prices make clear that they are not dictated by the efforts of others and are therefore not investment contracts.