SEC fines company $6m for selling NFTs as “investment contracts”

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This case with the SEC raises broader questions about the scope of regulatory involvement in the NFT landscape.

Impact Theory, situated in Los Angeles, specializes in producing entertainment and educational content, including podcasts.

The SEC’s stance is rooted in Impact Theory’s apparent encouragement of investors to consider their purchase of a Founder’s Key as a direct investment into the company. It asserted that it was striving to become the “next Disney,” and that this achievement would yield substantial value to those purchasing Founder’s Keys.

Impact Theory has been directed to pay over $6.1 million in disgorgement, prejudgment interest, and a civil penalty. Despite agreeing to this settlement, the company neither admitted to nor denied the agency’s findings. This enforcement action by the SEC marks a significant milestone, as it is the first instance where the agency has intervened in matters relating to NFTs. However, two SEC commissioners, Hester Peirce and Mark Uyeda,their dissent regarding this decision. They argued that the NFTs in question didn’t resemble shares of a company and didn’t offer dividends to purchasers.

 

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