SEC Issues First Enforcement Action Targeting NFTs

U.S. regulators have ordered Impact Theory, a Los Angeles-based company, to compensate investors who purchased non-fungible tokens (NFTs), ruling that the transactions were illegal unregistered securities offerings. Impact Theory, which sold three tiers of NFTs, will set up a fund to reimburse investors, destroy any remaining NFTs, and pay over $6.1 million in penalties.

coindesk.com

Relevant topic timeline:

8/28/2023

For the first time, the SEC has charged an NFT project with selling unregistered securities

The US Securities and Exchange Commission (SEC) has taken its first enforcement action against a company for selling unregistered securities in the form of non-fungible tokens (NFTs), with Impact Theory settling with the SEC for over $6.1 million and decommissioning its Founder's Key NFTs.

8/29/2023

Crypto lawyer about SEC: ‘Problematic to imply all NFTs are securities’

The SEC's enforcement action against Impact Theory for selling unregistered securities as NFTs has raised concerns and sparked debate about the classification of NFTs as securities, with some arguing that it could have negative implications for the NFT industry and hinder innovation.

8/29/2023

Gary Gensler's SEC is going after NFT sales from 2021. What's the point?

The SEC has fined entertainment company Impact Theory $6.1 million and forced it to destroy all the NFTs it sold, ruling that the company conducted an unauthorized securities offering.

8/30/2023

SEC’s Hester Peirce Blasts Agency’s First NFT Lawsuit, Says Enforcement Action Raises Many Difficult Questions - The Daily Hodl

Two commissioners at the U.S. Securities and Exchange Commission (SEC) are critical of the agency's recent charges against Impact Theory for allegedly offering unregistered securities in the form of NFTs, arguing that the NFTs in question did not function as investment contracts and did not offer dividends to purchasers. The commissioners raise questions about the appropriateness of applying securities laws to NFTs and the implications of requiring the destruction of NFTs representing unique digital art or music.

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Posted 8/28/2023, 10:52:00 PM

SEC Issues First Enforcement Action Targeting NFTs

coindesk.com

Relevant topic timeline:

8/28/2023

For the first time, the SEC has charged an NFT project with selling unregistered securities

8/29/2023

Crypto lawyer about SEC: ‘Problematic to imply all NFTs are securities’

8/29/2023

Gary Gensler's SEC is going after NFT sales from 2021. What's the point?

The SEC has fined entertainment company Impact Theory $6.1 million and forced it to destroy all the NFTs it sold, ruling that the company conducted an unauthorized securities offering.

8/30/2023

SEC’s Hester Peirce Blasts Agency’s First NFT Lawsuit, Says Enforcement Action Raises Many Difficult Questions - The Daily Hodl