The SEC is now paying attention to NFTs. They took their first action about it. Some of the people in charge had different thoughts about it.
The U.S. Securities and Exchange Commission (SEC) has said that a company named Impact Theory in Los Angeles broke the rules by selling non-fungible tokens (NFTs) without asking permission.
This is the first time the SEC has taken action against NFTs. NFTs are special digital tags that show who owns things like art, sports stuff, images, and videos. They’re put on a kind of computer network called a blockchain.
NFTs Seen as Investments in Companies
The SEC made a decision on August 28. They said that the NFTs from Impact Theory are like investments because the company told people they would make money from the collectibles. They said the collectibles would become very valuable, like Disney.
The company Impact Theory said that if you buy their KeyNFTs with 1.5 ETH or more, you will get a lot of value. They’re really confident about it and will do anything to make sure it’s true.
There’s a rule called the Howey Test. It looks at things like if you’re hoping to make money and if you need other people’s work for it. These are usually signs of something being a security.
The U.S. SEC is cracking down on unregistered NFT sales! Impact Theory is facing enforcement action for promoting their Founder's Key NFT as an investment opportunity. A bold move by the authority, signaling a growing scrutiny of the NFT market. Stay compliant, folks! #SEC #NFTs
— mustafa chakmak (@Mustafachakmak) August 29, 2023
Impact Theory and the SEC talked about what happened. Impact Theory didn’t say they did anything wrong, but they agreed to a deal. They will pay the SEC more than $6.1 million as a penalty.
The SEC also told Impact Theory to get rid of all the Founder’s Keys NFTs and to stop getting money from sales that happen later.
Different Opinions Among the Commissioners
The SEC usually tries to control crypto, but its leaders didn’t all agree.
Two of the leaders, Hester Peirce and Mark Uyeda, said that the SEC doesn’t usually take action against people who sell things like watches or collectibles. They said this when they didn’t agree with the rest of the group.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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