SEC Takes First Enforcement Measure Against NFTs Regulatory Body Concludes Impact Theory’s NFTs Were Marketed as Unregistered Securities

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U.S. regulatory authorities have mandated a Los Angeles company, which had previously issued non-fungible tokens (NFTs), to provide compensation to investors.

The regulators’ stance is grounded in the contention that these transactions constituted unauthorized offerings of securities. This enforcement action marks a pivotal development as it represents the initial instance in which the U.S. Securities and Exchange Commission (SEC) has taken measures relating to NFTs.

It is noteworthy to emphasize that the conclusions drawn by the SEC do not insinuate a blanket classification of all NFTs as securities, thereby constraining the potential ramifications of this particular enforcement action.

The subject of this regulatory scrutiny is Impact Theory, a prominent media entity headquartered in California. This company garnered an impressive sum of nearly $30 million through the sale of three tiers of NFT offerings. The SEC’s evaluation, as disclosed in a statement issued by the market regulatory body on Monday, has categorized these NFTs as securities due to the fact that Impact Theory’s team had extended assurances to investors regarding the profitability of these collectibles. The team touted their substantial inherent value, a fact substantiated by an official SEC order.

Specifically, the SEC order notes, “Impact Theory encouraged potential investors to view the purchase of a Founder’s Key as an investment into the business, stating that investors would profit from their purchases if Impact Theory was successful in its effort.”

In response to these developments, Impact Theory has consented to establish a restitution fund, earmarked for reimbursing investors who had acquired the NFTs in question. Furthermore, the company has committed to the eradication of any remaining NFTs under its possession. Beyond these measures, the company has also acceded to remit an aggregate sum exceeding $6.1 million as penalties to the federal regulatory authorities, as specified in the SEC order.

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