OpenSea has delisted Dao Turtles NFT Series, citing violations on terms of service.
The sold-out collection of 10,000 DAO Turtles dropped on October 4 and has since recorded trading volume on OpenSea of more than 570 Ether (roughly $2 million). The project combines DAO, Staking and Play-to-Earn in its roadmap. Following the move of OpenSea, the selling of the turtle images has been halted indefinitely.

The Scoop: DAO Turtles Delistment from OpenSea
The team behind DAO Turtles shared their correspondence with OpenSea. The NFT platform asserts that the project is carrying out financial activities subject to registration or licensing. For example, creating, listing or buying securities, commodities, options, real estate or debt instruments.
Although the letter did not identify the specific financial instrument, the most applicable one is Securities. DAO Turtles operate under a governance model using $turtleshell tokens. Since it combines DAO, Staking and P2E, the possible trigger point is how its pooling money together with an expectation of profit.
Based on existing regulations, combining DAOs with utility tokens would immediately require projects to be legally registered as a security with SEC.

The DAO Turtles Team has been proactively addressing the situation. The official tweet reads: “We understand which RULES we might have violated by our language and descriptions, which we have changed. NONE OF OUR ACTIONS were illegal or against the law! The only thing we have done so far is launch DAO & Jail turtles!”
The team has now altered language on its website that had promised to pay a percentage of future NFT projects to DAO Turtle owners. It still promises to give each NFT holder a “Turtleshell token” and incentivize users in a “non-commercial manner” to quiet concerns about securities rules.
The Reaction of the Community
Naturally, the Community, particularly the NFT holders, are not pleased about the development. Some feel that the stipulations cited by OpenSea apply to half of the NFT Projects in the Market. Leading to questions like why is DAO Turtles NFT Series being singled out?

Others are expressing concern over the power that OpenSea wields. One user pointed out that “The one miss here is we aren’t talking about the SEC. We are talking about OpenSea just looking at a turtle project and being like “yeah let’s freeze that one. Dao Turtles might be in violation but the random enforcement should scare other projects.”
The Community is also zeroing in on how there’s no appeal process which puts the existing NFT holders at the losing end.
What’s the next move?
The team is currently holding a vote on how the Community wants to proceed regarding the issue. So far, NFT holders can choose between 5 strategic options.
The first one is to continue trading for DAO Turtles on Rarible. Meanwhile, the second option is to stay on Rarible but remove staking and community fund in order to minimize risks. Then, the team can also opt to move all the utility to Jail Turtles. Despite the risk of freezing being high, burning all DAO Turtles for a new Collection is still an option. Lastly, the team is considering swapping the metadata between DAO Turtles and Jail Turtles.

This is indeed a major blow towards DAO Turtles but it’s good to see that their backs are not totally pushed against the wall. There are still a lot of viable options to explore and choose from.
The NFT Community awaits how this situation will unfold especially because it can set a precedent. Just like how ICOs and Crypto had to navigate the regulators, it seems like NFT Projects are following in its footsteps. A few days ago, we reported that even BAYC is taking its time to release their BAYC Coin. They said that “it’s much more complicated to construct a legally compliant token and set it up in a responsible, sustainable way.” So the best approach is to do it the sound way.
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