OpenSea has issued a statement regarding a Wells notice from the U.S. Securities and Exchange Commission (SEC).

The company says the notice indicates that the SEC is considering bringing a lawsuit against OpenSea.

The company stated:

“We’re confident that OpenSea operates legally and that our users aren’t trading securities when they buy or sell NFTs using our platform. Our users engage with NFTs for many reasons, like purchasing a gaming item or avatar to use in a game, supporting a beloved artist, or boasting allegiance to their chosen sports team.

Classifying NFTs as securities would not only misinterpret the law, but it would also jeopardize artists’ livelihoods, disempower collectors and gamers, and stifle innovation across the many promising use cases for NFTs”.

OpenSea says it is pledging $5M to cover legal fees for NFT artists and developers that receive a Wells notice.