SEC forces US-based Impact Theory to pay a fine for selling NFTs
For the first time in history, the US Securities and Exchange Commission found the sale of non-fungible tokens illegal. The SEC has charged Impact Theory with an unregistered offering of securities in the form of a sale.
Previously, an American entertainment and educational video production project received about $30 million after the sale of NFTs in three different categories from the Founders Keys collection.
“Impact Theory encouraged potential investors to view the purchase of Founder’s Keys as an investment in the business, stating that investors would profit from their purchases if the company was successful in its efforts,” the regulator said in a statement.
The SEC believes the company planned to create “the next Disney,” which, if successful, could bring “tremendous value” to NFT owners. According to the Commission, the tokens sold by the project are investment contracts and, accordingly, Impact Theory is a violator of securities laws.
“In the absence of a valid exemption, offers of securities in any form must be registered. Without registration, investors of all types are deprived of the protection provided to them by proper disclosure of information and other guarantees long provided by law, ” said Antonia Apps, head of the New York regional office of the SEC.
Impact Theory pleaded not guilty, but the company is willing to pay $6.1 million in fines and interest. In addition, all NFTs created by a firm that also refuses to receive royalties will be destroyed.
The SEC’s actions provoked criticism from Commissioners Hester Pierce and Mark Ueda. They believe that the regulator should have dealt with several “serious issues” before the first enforcement action regarding non-fungible tokens.
“We do not routinely take enforcement action against people who sell watches, paintings, or collectibles along with vague promises to create a brand and thus increase the value of these tangible items,” SEC officials said.
This is not the first time the regulator’s actions have caused bewilderment in the cryptocurrency community and among experts loyal to the industry. For example, the creator of the decentralized platform dYdX, Antonio Giuliano, is sure that crypto developers should refuse to serve American clients and focus on other markets.
The expert expressed the opinion that in the short term the US cryptocurrency market will lose to other jurisdictions where projects related to digital assets face less regulatory pressure.
“Crypto developers should simply refuse to serve US customers and return to the country in five to ten years. This is unlikely to negatively affect the state of current projects, since the main audience and most of the market are already abroad,” Giuliano summed up.
