Los Angeles-based media company Impact Theory has paid $6 million in damages after the Securities and Exchange Commission (SEC) alleged that its NFTs were unregistered securities, according to a report. press release. As a result of the settlement, the company was also ordered to destroy all of the founder’s key NFTs.
until noon on monday, Founder’s Keys She was still active in Opensea. At the time of writing this article, the minimum price for NFTs is 0.039 ETH, or roughly $64.
Since the group’s launch, they’ve generated a combined turnover of $5.4 million, according to Opensea. Impact Theory was founded by an entrepreneur and social media influencer Tom Pellew.
Screenshot of Impact Theory Founders NFT pool at Opensea taken on Monday August 28, 2023.
The SEC announced the indictments and settlement on Monday, saying the company raised nearly $30 million from a variety of investors, including some US-based investors.
According to the SEC alleging, between October and December 2021, Impact Theory provided and traded three unique types of NFTs called Founder’s Keys, titled “Legendary”, “Heroic” and “Tireless”. The SEC’s findings indicate that Impact Theory actively promoted these non-fungible tokens as a direct investment opportunity in the company to potential backers. They have quoted that buying a Founder’s Key would turn a profit if the company thrives, and they often compare this to their ambition to emulate the success record of major entertainment conglomerates like Disney.
The SEC now claims that these NFTs are security investment contracts. Thus, Impact Theory made an unregistered securities offering when it sold the NFTs.
In response to the SEC’s findings, and without admitting or contesting the charges, Impact Theory has agreed to a cease and desist order. This meant that the company violated the registration rules of the Securities Exchange Act of 1933, forcing it to pay a lump sum amount in excess of $6.1 million.
The settlement includes restitution of ill-gotten gains, pre-judgment interest and a civil penalty. In addition, a fair fund will be set up to facilitate the return of funds to affected investors. The company is also required to destroy all Founder’s Keys NFTs under its control, post the order on its online platforms, and waive any future secondary market transaction fees associated with Founder’s Keys NFTs.
The SEC’s investigation into the matter was managed by its regional office in New York, with support from the Enforcement Division’s Cryptocurrency and Cyber Assets Unit (CACU) and its Risk and Economic Analysis Division.
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