SEC orders LA-based company to pay $6.1 million for alleged sale of NFTs as unregistered securities–what investors should know

For the first time, the Securities and Exchange Commission has levied enforcement action against a company's sale ofOn Monday, the SEC fined Impact Theory, a Los Angeles-based entertainment company, $6.1 million, alleging the NFTs sold by the company were unregistered crypto asset securities, per anThe NFTs, called Founder's Keys, were sold between October and December 2021.

Because of this promise to deliver"tremendous value" to Founder's Key buyers, the SEC says the NFTs count as and are therefore securities, which must be registered with the agency before being offered to the public.," which includes the following criteria:in which the investor expects a profit; andImpact Theory hasn't admitted or denied the SEC's allegations, but has agreed to a cease-and-desist order. The company will also destroy any remaining NFTs in its possession and return funds to investors who purchased NFTs, according to the SEC's press release.

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Source: CoinDesk - 🏆 291. / 63 Read more »