SEC Says NFTs Are Securities in Lawsuit Against Los Angeles Entertainment Company Impact Theory

The U.S. Securities and Exchange Commission (SEC) is charging a widely followed media company with securities violations in relation to the sale of non-fungible tokens (NFTs).

The SEC is announcing formal charges against the Los Angeles-based entertainer Impact Theory for allegedly offering NFTs as an “unregistered offering of crypto asset securities.”

“[The SEC] today charged Impact Theory, LLC, a media and entertainment company headquartered in Los Angeles, with conducting an unregistered offering of crypto asset securities in the form of purported non-fungible tokens (NFTs). Impact Theory raised approximately $30 million from hundreds of investors, including investors across the United States, through the offering.”

According to the SEC’s press release, Impact Theory encouraged followers to purchase NFTs from a collection known as “Founder’s Keys” with promises of investing in something that had the potential to become as large as “the next Disney,” promising “tremendous value” to the investors. According to the SEC, these sales and others were investment contracts and therefore constituted securities sales.

Says Antonia Apps, Director of the SEC’s New York Regional Office,

“Absent a valid exemption, offerings of securities, in whatever form, must be registered. Without registration, investors of all types are deprived of the protections afforded them by the robust disclosures and other safeguards long provided by our securities laws.”

Impact Theory has agreed to cease-and-desist NFT sales, to destroy all Founder’s Keys, and to pay out more than $6.1 million in fees and penalties. The entertainment company neither admits nor denies the SEC’s charges.

Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox

Check Price Action

Follow us on Twitter, Facebook and Telegram

Surf The Daily Hodl Mix

Check Latest News Headlines

&nbsp

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Featured Image: Shutterstock/david.costa.art