The US Securities and Exchange Commission (SEC) accused Impact Theory of unregistered placement of securities in the form of sales of non-fungible tokens.
The Los Angeles-based entertainment and educational video content firm has allegedly raised about $30 million through the sale of three different NFT product lines under the Founder’s Keys name.
“Impact Theory encouraged potential investors to view the purchase of Founder’s Keys as an investment in the business, stating that investors will profit from their purchases if the company is successful in its efforts,” the statement said.
According to the regulator, the firm intended to build “the next Disney,” which, if successful, would bring “tremendous value” to NFT buyers.
The Commission determined that the tokens sold were investment contracts and therefore Impact Theory violated federal securities laws.
“In the absence of a valid exemption, offers of securities in any form must be registered. Without registration, investors of all types are deprived of the protection provided to them by proper disclosure and other guarantees long established by law, ”said Antonia Apps, director of the New York Regional Office of the SEC.
The company pleaded guilty without confirming or denying the Commission’s findings. Impact Theory agreed to pay a total of $6.1 million in penalties and interest. The regulator approved a compensation fund for investors who bought NFTs. The firm also agreed to destroy all tokens under its control and waive any royalties.
Commissioners Hester Pierce and Mark Ueda criticized the Commission’s order. In their opinion, the regulator had to deal with a number of “serious issues” before taking the first enforcement actions regarding NFT. They believe that even if the sale of assets met the Howey test, the regulator had no reason to take action in this case.
“We do not routinely take enforcement action against people who sell watches, paintings, or collectibles along with vague promises to create a brand and thus increase the value of these tangible items,” SEC officials said.
Recall that SEC Chairman Gary Gensler believes that all cryptocurrencies are investment contracts and are subject to registration with the department.
Found a mistake in the text? Select it and press CTRL+ENTER
ForkLog Newsletters: Keep your finger on the pulse of the bitcoin industry!