The US Securities and Exchange Commission is suing a non-fungible token project, marking the first time the agency has taken enforcement action against a company for selling unregistered NFT tokens.
Impact Theory, a Los Angeles-based media company, encouraged potential investors to watch the Founder’s Key purchase. [the company’s NFT project] as an investment in the business, stating that investors would benefit from their purchases if the influence theory succeeds in its efforts,” the SEC order said, adding that the digital assets offered to investors were in the form of “investment contracts” and therefore “collateral.”
All in all, Impact Theory has raised about $30 million from hundreds of investors, including those in the US
The case is important for the cryptocurrency industry, which has been hit by a wave of regulation in the US, because it provides a clue as to how NFTs can be regulated in the future. Many other NFT projects have used language similar to the way Impact Theory has marketed its digital assets, i.e. promoting its blockchain-based identifiers that represent ownership of digital assets as investment opportunities.
Impact Theory neither admitted nor denied the SEC’s findings, but agreed to pay more than $6.1 million in penalties to settle the allegations. The order also created a “fair fund” to compensate affected investors as well as Impact Theory’s premise is to destroy all of its founder’s major NFTs and cancel any royalties it may collect from secondary market transactions.
The company is not giving up on its NFT endeavors. in X mailThe founder of Impact Theory emphasized that his company will ensure that its future digital assets are for utility and not financial purposes:
“We will conduct our future business in accordance with our best faith understanding of all applicable laws, rules and regulations, and will make it clear that all of Impact Theory’s digital assets are collectibles of interest within Borderless Entertainment’s exciting new landscape, and people would be highly discouraged from dealing with our digital assets on It’s anything but what it is – useful collectibles We’ll have more news on that in the coming weeks and months.