SEC Charges Media Firm for the Sale of Unregistered Securities
- The SEC has charged entertainment firm Impact Theory for the sale of NFTs to investors in the US.
- It said that the NFTs were unregistered securities promoted to investors on promises of increased returns.
- The firm raised close to $30 million from the sale of the NFTs between October and December 2021.
- The firm promoted the NFT collection by stating that it would create a new Disney.
The United States Securities and Exchange Commission (SEC) has once again charged a crypto-related entity for the sale of unregistered securities. A popular media and entertainment firm was charged by the regulator for selling non-fungible tokens (NFTs) to investors based in the United States between October and December 2021.
It is crucial to note that the new action taken by the SEC against Impact Theory is the regulator’s first unregistered securities action against NFT offerings. Interestingly, Impact Theory is responsible for producing entertainment and educational podcasts and claimed that it would “build a new Disney” while promoting its NFT collection to investors.
According to the official announcement from the SEC, the Los Angeles-based firm, which has published multiple podcasts and entertainment content, generated close to $30 million from the sale of the NFT collection, which was called the “Founder’s Keys.” The NFTs were offered in three tiers, and as per the regulator, the firm “encouraged potential investors to view the purchase of a Founder’s Key as an investment into the business.”
“Absent a valid exemption, offerings of securities, in whatever form, must be registered,” said Antonia Apps, Director of the SEC’s New York Regional Office. “Without registration, investors of all types are deprived of the protections afforded them by the robust disclosures and other safeguards long provided by our securities laws.”
Further, the SEC claims that the firm promoted the NFT collection by stating that it would create a new Disney, and holding onto the NFTs would allow them to have a piece of the firm’s business. The regulator said that it believed the offerings to be securities, and as a result, Impact Theory violated the Securities Act of 1933 by selling them without registration.
As per the official NFT statistics, a “Legendary” (top) tier Founder’s Key NFT was last sold two days ago for a total price of $1,468. Interestingly, this is one of 10 sales in the past seven days, with the total token supply being 13,572, with 4,620 owners.
As reported earlier, the SEC filed a motion to appeal against the decision taken by Judge Analisa Torres in the XRP lawsuit, wherein the regulator claims that the sale of the token consisted of unregistered securities.