News - U.S. securities regulator SEC takes action against NFT sales

By Mike Hesp

U.S. securities regulator SEC takes action against NFT sales

Laws and regulations
USA

For the first time, the U.S. securities regulator SEC has filed charges against an NFT sale. The company behind the NFT sale is accused of issuing unregistered securities.

The U.S. securities regulator SEC has already filed numerous lawsuits against the cryptocurrency industry. Most of the cases involved the issuance of cryptocurrencies that the SEC classified as unregistered securities. Now, for the first time, the agency has applied the same prosecution method to a NFT-sales.

Yesterday, Aug. 28, were allegations known of US authorities that the Los Angeles-based media company Impact Theory had unlawfully conducted a securities sale, in the form of NFTs.

Between October and December 2021, the media company had raised nearly $30 million by selling NFTs called "Founder Keys."

Based on Impact Theory's promises to the NFT buyers, the SEC believes that the conditions of a securities issue were met. The NFT investors were promised that they would benefit from the company's growth.

According to the SEC, Impact Theory must now pay $6.1 million dollars in fines and unwind the entire NFT sale, i.e. return the money to investors and destroy all NFTs in its possession.

The SEC's new charge has already prompted reactions. Critics accuse the agency of overstepping its bounds. Even within the SEC's own leadership there has been backlash from Mark Uyeda and Hester Peirce, who have criticized the disagree with the charges and find that the offense of selling securities is not met.

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