The first SEC enforcement action involving NFTs

there Securities and Exchange Commission (SEC) accused influence theoryIt is a Los Angeles-based media and entertainment companyThe unregistered securities offering of crypto assets in the form of non-fungible tokens (NFTs). Through the offering, Impact Theory has raised nearly $30 million from hundreds of investors, including investors across the United States. This is the SEC’s first enforcement action involving NFTs.

Per the SEC’s order, from October to December 2021, Impact Theory offered and sold three levels of NFTs, known as Founder’s Keys, which Impact Theory called “Legendary”, “Heroic” and “Relentless”. Among other things, influence theory indicated that it was “Try the next Disney build“And if it succeeds, it will provide.”Huge valuefor buyers. It appears from the decree that the NFTs offered and sold to investors were investment contracts and therefore securities. As a result, Impact Theory violated federal securities laws by offering and selling these crypto-asset securities to the public in a registered location that was not. Otherwise exempt from registration.

“In the absence of a valid exemption, securities offerings must be registered, in any form. Without registration, investors of all types are protected,” said Antonia Abs, director of the SEC’s regional office in New York. They are deprived of the protections afforded by strong disclosures and other safeguards that our securities laws have provided for a long time.”

Without acknowledging or denying the SEC’s findings, Impact Theory approved the cease and desist order and rescinded the order. Paying over $6.1 million In violation, interest and civil fine. The decree also creates a fund to reimburse the money affected investors paid to purchase NFTs.