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August 26th, 2025
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Two Artists Sue SEC for NFT legal Showdown
NFTs | Jul 30, 2024
Image from content shared on X, Johnathan Mann
Two artists, Johnathan Mann and Brian Frye, are suing the U.S. Securities and Exchange Commission (SEC) over the classification of NFTs as securities
Who are the plaintiffs are why are they suing the SEC?
The plaintiffs, Jonathan Mann and Brian L. Frye, are well-known names in the digital art and legal fields, respectively. In a 45 page PDF complaint to the SEC, the lawsuit challenges the current regulatory approach to NFTs, arguing the lack of clear guidelines, and that the current approach stifles artistic innovation and creates legal risks of creators.
- Jonathan Mann: Known as "Song A Day Mann," is a musician and digital artist who has been writing and releasing new music every day since January 1, 2009. This bizarre feat earned him the Guinness World Record for "Most Consecutive Days Writing a Song." His writing frequently includes political commentary, personal musings, and satirical perspectives on current events. Mann's usage of NFTs for music distribution and monetization has risen his profile in the digital art arena.
- Brian L. Frye: A conceptual artist who also teaches law at the University of Kentucky's J. David Rosenberg College of Law. He is noted for his work that combines legal study and conceptual art, frequently examining themes of intellectual property and legal philosophy. Frye's creations frequently feature the creative usage of NFTs, which he sells as digital versions of his work. He is a legal expert on digital art and NFTs, and is calling for clearer legislation to protect both artists and customers. Frye argues the current situation is unsustainable and stifles artistic expression.
The lawsuit specifically challenges recent SEC actions against NFT projects, such as Impact Theory and Stoner Cats, where the SEC determined that these NFTs are unregistered securities. Further, Mann and Frye argue that by applying the Howey test to NFTs, which are unique digital representations of art, is overreach by the SEC, and creates legal uncertainty for artists.
I've been writing a song a day for 16 years and 211 days.
Today, I’m suing the SEC.
(Yes, this is real) pic.twitter.com/QubAgbltr0
— 16 years of song a day (@songadaymann) July 29, 2024
Internal SEC Debate and Precedents in the Making
There has been significant disagreement inside the SEC on how NFTs should be handled. Commissioners Hester Peirce and Mark Uyeda have opposed the broad application of securities laws to NFTs, stating that such proceedings may stifle artistic and technological innovation. Global Law Hub suggests a more sophisticated approach to NFTs, taking into account their particular qualities and importance in the digital economy.
See: ‘Mugshot Edition’ Trump NFTs Blending Politics, Memorabilia and Digital Assets
Recent regulatory cases, including Impact Theory, Stoner Cats, and Dapper Labs' NBA Top Shot, demonstrate the SEC's position who believes certain NFTs might be considered securities, especially when sold with profit expectations. These cases highlight the complexities involved with the current regulatory approach for the NFT market, while emphasizing the need for clearer guidelines to distinguish between collectible art and investment security products.
Outlook
A decision in favour of the artists could lead to more nuanced and supportive regulatory frameworks, encouraging NFT innovation in the digital art sector. Conversely, a decision that confirms NFTs' status as securities would cause a raft of issues for digital artists and producers.
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