SEC tackles NFT project for the first time

The media company Impact Theory had highlighted sale from NFT corresponding to a status (Legendary, Heroic and Relentless). The SEC sanctions her for unregistered sale of securities and imposed a 6 million dollar penalty.

La SECthe U.S. securities regulator, recently reclassified a large number of cryptocurrencies as investment contracts. However, the regulator is not only interested in this type of token, as demonstrated by the proceedings againstImpact Theory.

The media and entertainment company had put non-fungible tokens on sale. NFT. A total of three categories of tokens were issued: Legendary, Heroic and Relentless. The opportunity for the company to raise 30 million dollars from hundreds of investors.

NFTs sold for a promise of financial return

For the SEC, the purchasers of these NFTs are indeed investors, and the tokens of the financial securities. Consequently, the sale should have been registered with the authorities beforehand. This failure on the part of Impact Theory constitutes an infringement.

For the U.S. Commission, there is no doubt that NFTs, marketed as Founding Keys, constitute an infringement. investment contract and therefore qualify as securities.

In particular, Impact Theory emphasized that it was ‘trying to build the next Disney’ and that, if successful, it would offer ‘tremendous value’ to purchasers of founders’ keys. The order concludes that the NFTs offered and sold to investors were investment contracts and therefore securities,” the SEC ruled.

Impact Theory must reimburse buyers

For the company, the axe has been cut. Without admitting or denying the SEC’s conclusions”, Impact Theory negotiated a settlement with the regulator. Under the terms of this agreement, the company put an end to the sale of its NFTs and settled its claims. 6.1 million.

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The token issuer has also undertaken to “return the sums that the aggrieved investors paid to purchase the NFTs”. Impact Theory will no longer be able to derive any revenue from these tokens, and in particular will no longer be entitled to receive royalties on secondary market transactions.

In the eyes of the U.S. regulator, the use of NFTs cannot constitute a means of circumventing current legislation and escaping recharacterization. The SEC also demonstrates that non-fungible tokens are not immune from its action.

SEC dissent on method

Impact Theory encouraged potential investors to consider the purchase of a founder’s key as an investment in the company, stating that investors would benefit from their purchases if Impact Theory was successful in its efforts,” analyzes the Commission.

However, this decision did not meet with unanimous approval among the Commissioners. Its Republican representatives, Hester Peirce and Mark Uyeda, challenged the regulator’s action.

They express their disagreement and the use of “a decades-old legal test to determine whether a product was an investment contract”.

NFTs were not shares in a company and did not generate any type of dividend for buyers”, the commissioners consider.

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