A federal judge in Louisiana rejected a lawsuit from two NFT creators who wanted to stop the U.S. Securities and Exchange Commission (SEC) from pursuing enforcement action against them.
On Tuesday, District Judge Greg Guidry ruled that the complaint from musician Jonathan Mann and law professor Bryan Frye was too speculative. The pair argued that their NFT art sales could eventually be treated as unregistered securities. However, Guidry said the case lacked a concrete dispute. “The SEC’s future regulation of NFTs is far from resolved,” he wrote. “There is little guidance.”
Mann, known for his daily songwriting projects, and Frye, who teaches intellectual property law at the University of Kentucky, have sold NFTs since 2018. They claimed the SEC’s posture created uncertainty that threatened artists who experiment with blockchain-based tools.
NFTs are unique digital tokens recorded on a blockchain. As a result, they have raised fresh questions about regulation, intellectual property, and investor protection. In 2023, the creators of the animated series Stoner Cats paid a $1 million fine to settle SEC charges over an unregistered NFT sale. The settlement did not include an admission of wrongdoing. Moreover, two SEC commissioners urged the agency to issue clearer guidance for artists and innovators.
According to Reuters, the SEC told the court that earlier NFT enforcement cases had no binding effect on Mann or Frye. Consequently, Guidry sided with the regulator and said the plaintiffs had failed to show that the SEC had adopted a final policy on NFTs.
The case, Mann v. Securities and Exchange Commission, was filed in the U.S. District Court for the Eastern District of Louisiana.
