DAO Turtles NFT series was removed from OpenSea citing violations of terms and conditions. On October 4th, 2021 the sold-out collection featuring 10,000 DAO Turtles was released. Since then, OpenSea has recorded trading volumes of over 570 Ether (roughly 2 million) and more than 10.000 DAO Turtles. It combines DAO and Staking with Play-to-Earn. The sale of turtle images was stopped indefinitely after OpenSea’s move.
Without prior notice or warning, OpenSea delisted the DAO Turtles NFT Project. Credit: Twitter: @DAO_Turtles
DAO Turtles Delisted On OpenSea
OpenSea received correspondence from DAO Turtles’ team. NFT claims that the project is engaging in financial activities that require licensing or registration. This could include the creation, listing, or buying of securities, commodities or options.
The letter didn’t identify the financial instrument but Securities was the most appropriate. DAO Turtles are guided by a governance model that uses $turtleshell tokens. It combines DAO and Staking with P2E. The possible trigger point is how it pools money together with the expectation of profit.
According to existing regulations, projects that combine DAOs and utility tokens will need to be legal registered with the SEC as security.
The DAO Turtles Team has taken proactive steps to address the problem. Official Tweet:
According to your suggestions we have changed quite a few things to minimize the possibility of any violation of the @opensea Terms of Service.
1️⃣The OpenSea description of DAO Turtles
2️⃣The OpenSea description of Jail Turtles
3️⃣Significant website text change#freetheturtles
— Jail turtles (@DAO_Turtles) October 9, 2021
“We have corrected any RULES that we may have broken by our language or descriptions. OUR ACTIONS WERE NOT illegal or contrary to the law. We have launched DAO & Jail Turtles so far.”
Now, the team has changed the language on its website. It had previously promised to pay DAO Turtle owners a portion of future NFT projects. It promises each NFT holder a Turtleshell token and encourages users in a non-commercial way to calm concerns about securities regulations.
The Reaction of the Community
The development is not welcomed by the Community, especially the NFT holders. OpenSea cites half of the NFT Projects on the Market. This raises questions such as “Why is DAO Turtles NFT Series being excluded?”
This development has been resented by the community. Credit: Teotilloverdose
OpenSea’s power is causing concern among others. One user pointed out that we’re not talking about the SEC. OpenSea is not talking about a turtle project being looked at and then decided to freeze it. While Dao Turtles may be in violation, the random enforcement should make other projects afraid.
The rest of the NFT space needs to be paying attention to what is happening with @DAO_Turtles. Opensea states this is the reason it got disabled for trading… but this looks very relevant to more than half of the top NFTs trading right now… pic.twitter.com/LceS8RN9Ib
— Micah G (@Lucky5Micah) October 8, 2021
The Community is also focusing on the fact that there is no appeal process, which would leave existing NFT holders in the dust.
What’s Next For DAO Turtles?
The Community is currently voting on how they want to handle the issue. NFT holders have so far been able to choose from five strategic options.
First, you can trade for DAO Turtles on Rarible. The second option, which is less risky, is to remain on Rarible and remove stakes and the community fund. You can also choose to move all utility to Jail Turtles. Even though the risk of freezing is high, it’s still possible to burn all DAO Turtles in order to create a new Collection. The team is also considering swapping metadata between Jail Turtles and DAO Turtles.
Although this is a significant blow to DAO Turtles, it’s encouraging to see that they aren’t completely pushed against the wall. There are many options available to explore and choose from.
NFT Community is eager to see how this unfolds, especially as it could set a precedent. NFT Projects seem to be following the same path as ICOs and Crypto. We reported a few days back that even BAYC was taking its time to issue its BAYC Coin. It’s more difficult to create a legally compliant token and set it up in a responsible, sustainable manner. So it is best to do it through the sound method.