The US Securities and Exchange Commission (SEC) has charged Los Angeles-based media and entertainment company Impact Theory, LLC with offering unregistered securities in the form of NFTs. According to a press release on Monday, the company had raised over $30 million, including from US investors.
Impact Theory had allegedly emphasized that their goal was to “build the next Disney,” and promised “tremendous value” to purchasers of their Founder’s Key NFTs. As a result, these NFTs were deemed to be investment contracts, thus violating federal securities laws.
The company accepted a $6.1 million fine and a cease-and-desist order. They must also refund the affected investors and destroy all the NFTs. Furthermore, Impact Theory agreed to publish the SEC’s order on its websites and social media channels, and eliminate any royalties from future secondary market transactions involving the Founder’s Keys.
This marks the first enforcement action by the SEC in the NFTs space. It follows a series of similar actions and settlements taken against major crypto exchanges Binance and Coinbase in recent months.
Unfortunately, the SEC suffered a major setback in July when US Judge Analisa Torres concluded that the cryptocurrency XRP is not a security. The agency has filed a motion for an interlocutory appeal, though many legal experts and industry leaders believe the SEC will be embarrassed once again.
