SEC Declares NFTs as Securities in Lawsuit Against Impact Theory, Los Angeles Entertainment Company
The U.S. Securities and Exchange Commission (SEC) has filed securities violation charges against a prominent media company over the sale of non-fungible tokens (NFTs).
The SEC has officially announced charges against Impact Theory, an entertainer based in Los Angeles, for allegedly engaging in the unregistered sale of crypto asset securities in the form of non-fungible tokens (NFTs).
"Today, the SEC filed formal charges against Los Angeles-based media and entertainment company, Impact Theory, LLC, for conducting an unregistered offering of crypto asset securities in the shape of purported non-fungible tokens (NFTs). Through this offering, Impact Theory amassed around $30 million from numerous investors, including those within the United States."
As per the SEC's press release, Impact Theory encouraged its followers to acquire NFTs from the "Founder's Keys" collection, offering the potential to invest in a venture that could rival "the next Disney" and yield "significant value" for investors. The SEC asserts that these sales and others were essentially investment contracts, thereby falling under the category of securities transactions.
According to Antonia Apps, the Director of the SEC's New York Regional Office:
"Unless a valid exemption applies, securities offerings of any kind must undergo registration. The absence of registration deprives all types of investors of the protections that our securities laws have long provided through robust disclosures and other safeguards."
Impact Theory has agreed to halt NFT sales, discard all Founder's Keys, and pay over $6.1 million in fines and penalties. The entertainment company neither acknowledges nor disputes the SEC's allegations.
Aug 29, 2023
