“Here he comes, here he comes, the SEC is here again!”
1. Overview of the allegations: "NFT issuance without registration"
Overview of the SEC's charges against Los Angeles-based company Impact Theory:
- The Core Issue: The U.S. Securities and Exchange Commission (SEC) today charged Los Angeles-based media and entertainment company Impact Theory with engaging in an unregistered offering of crypto asset securities through so-called non-fungible tokens (NFTs).
- Fundraising: Impact Theory raised approximately $30 million through this NFT issuance, with investors across the United States.
- details:
- Time: From October to December 2021.
- NFT name: called Founder's Keys, with three levels: Legendary, Heroic, Relentless.
- Company Promise: Impact Theory claims they are trying to “build the next Disney” and claims that success will bring “tremendous value” to buyers of NFTs.
- SEC’s position: The SEC believes that these NFTs are in fact investment contracts and therefore also considered securities. The SEC’s main argument is that unregistered securities offerings are illegal.
- Response and Penalty:
- Impact Theory neither admitted nor denied the SEC’s allegations.
- Impact Theory agreed to pay more than $6.1 million, which includes disgorgement, prejudgment interest and civil penalties.
- To protect investors, a fair fund has been established to refund funds purchased for NFTs.
- Impact Theory also agreed to destroy all founder keys under its control and to notify this decision on its official platform.
- Warning from SEC officials: Antonia Apps, director of the New York Regional Office of the U.S. Securities and Exchange Commission, reminded that all forms of securities issuance must first be registered to protect the rights and interests of investors.
2. "Strengthening NFT market supervision"
Increased Regulation: The SEC’s action against Impact Theory suggests that regulators are paying closer attention to the NFT market, especially projects that may be considered crypto asset securities offerings.
Definitional uncertainty: The SEC’s designation of certain NFTs as securities could lead to confusion and uncertainty in the market.
Impact on trading platforms: NFT trading platforms such as OpenSea may be affected by this incident and may be more cautious in choosing the NFTs to list.
The double-edged sword of regulation: While regulation may inhibit some innovation, it can also bring more legitimacy and transparency to the market.
tail
Regardless of the SEC’s future attitude, or whether there are more actions, I think the NFT market does need to consider new ways of styling;
Excessive regulation will inhibit the innovation and development of the ecosystem, but we also hope that the SEC and the crypto community can reach a good balance to ensure the rights and interests of investors while encouraging technological and application innovation!
At the same time, we must also take into account the operation and maintenance of the brand IP, and avoid incidents similar to Azuki that would cause investors to lose confidence and cause market chaos.
✏️Disclaimer: This article is for reference only, DYOR
Source: Alpha Investment Research
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