The U.S. Securities and Exchange Commission is prosecuting a non-fungible token project, marking the first time the agency has taken enforcement action against a company for selling unregistered NFTs.
Los Angeles-based media company Impact Theory “encourages potential investors to consider purchases of Founder’s Key, the company’s NFT project, as an investment in the business, saying that if Impact Theory is successful, investors will profit from the purchase. US Securities Exchange The commission’s order said, adding that digital assets were offered to investors in the form of “investment contracts” and therefore “securities.”
All told, Impact Theory raised about $30 million from hundreds of investors, including U.S. investors.
The case is significant for the crypto industry, which has been hit by a series of regulatory crackdowns in the United States, because it provides clues about how NFTs will be regulated in the future. Many other NFT projects use language similar to the way Impact Theory markets its digital assets, promoting blockchain-based identifiers that represent ownership of digital assets as investment opportunities.
Impact Theory neither admitted nor denied the SEC’s findings but agreed to pay a fine of more than $6.1 million to settle the charges. The order also establishes an “equitable fund” to compensate affected investors and requires Impact Theory to destroy all of its founders’ key NFTs and eliminate any royalties it may have collected from secondary market transactions.
The company isn’t giving up on its NFT efforts. In an X post, the founder of Impact Theory emphasized that his company will ensure that its future digital assets will have practical rather than financial purposes:
“We will operate our business moving forward in accordance with our good faith, best understanding of all applicable laws, rules and regulations and will make it clear that all digital assets impacting the theory are practical in the exciting new landscape of entertainment without borders. of collectibles, and will strongly discourage people from viewing our digital assets as collectibles with utility. We will hear more about this in the coming weeks and months.”
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