Media firm Impact Theory, which raised money via the sale of NFTs, has consented to a cease-and-desist order from the SEC, which claims that the sale of these NFTs constituted an offering of unregistered securities.
According to the decision, Impact Theory misrepresented itself to potential NFT buyers by promising to provide “tremendous value” if they invested in the company.
enterprise officials emphasized on many occasions that these NFTs will serve as “the mechanism by which communities will be able to capture economic value from the growth of the company they support.”
After agreeing to buy the NFTs, the company has also said it would destroy any copies it has in its control, stop collecting royalties on any outstanding NFTs, and devise a strategy to keep returning money to investors.
This lawsuit marks the SEC’s first foray into the potentially lucrative NFT sector, and it may signal the start of a new push to put NFTs within the SEC’s purview. The SEC undoubtedly wants to signal that more is forthcoming:
Beginning with, “Today the Commission brought its first non-fungible token (NFT) enforcement action,” the SEC’s official statement posted on Monday makes clear that this is the agency’s first-ever action of this kind.
However, not all SEC Commissioners were in agreement, and Commissioners Hester Peirce and Mark Uyeda issued a statement outlining their reservations.
Noting that the SEC “does not routinely bring enforcement actions against people who sell watches, paintings, or collectibles along with vague promises to build the brand and thus increase the resale value of those tangible items,” they emphasize that the SEC “does not routinely bring enforcement actions against people who sell cryptocurrencies.”
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