Today, the SEC announced its first enforcement action against NFTs in a case that was settled by Impact Theory, the NFTs’ issuer. The SEC said the NFTs issued by Impact Theory were unlicensed securities. The company agreed to a cease-and-desist order, paid $6.1 million in penalties, and agreed to destroy all of the NFTs in question still in its control. Impact Theory will also eliminate any royalties that it might have received from sales of those NFTs on secondary markets. In 2021, the company sold three tiers of NFTs that it called Founder’s Keys. “Impact Theory invited potential investors to view the purchase of a KeyNFT as an investment into the business, stating that investors would profit from their purchases if Impact Theory was successful in its efforts,” the SEC complaint says. Impact Theory said it was “trying to build the next Disney” and that the proceeds from the sales would be used for “development,” “bringing on more team,” and “creating more projects.” “Now as we’re building out this IP, imagine that you could’ve gotten in on Disney when they were doing Steamboat Willie, and that’s how we think of the Legendary tier,” an Impact Theory team member said, according to the complaint. “That’s how we think of this whole first drop quite frankly.” In May 2022, the SEC beefed up its crypto assets and cyber enforcement unit, listing NFTs as an area of interest. NFTs also figured in the insider trading case against OpenSea product manager Nathaniel Chastain.
Full story : SEC takes first action against an NFT project as an unregistered security.
