Breaking: US SEC Charges Impact Theory Over Unregistered NFT Offerings
The U.S. Securities and Exchange Commission (SEC) has now set its eyes on Impact Theory, the Los Angeles-based media and entertainment company, with charges filed for selling unregistered securities.
In the chargesheet, the SEC accuses Impact Theory of conducting an unregistered offering of crypto asset securities in the form of non-fungible tokens and raising $30 million from various investors, which include investors from the United States.
What Are The Charges Filed By The SEC?
In the order, the SEC claims that Impact Theory introduced three tiers of NFTs named “Founder’s Keys”: “Legendary,” “Heroic,” and “Relentless,” between October and December 2021. Impact Theory encouraged potential investors to buy the NFTs as an investment into its business and promised lucrative returns on its success as it was “trying to build the next Disney.”
The SEC claims that Impact Theory violated the Securities Act of 1933 by selling the NFTs to investors to seek investment. The offering was unregistered and a type of investment contract, so the company was selling unregistered securities. Antonia Apps, Director of the SEC’s New York Regional Office, said, “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.”
How Did Impact Theory’s React?
Impact Theory agreed to a cease-and-desist order without giving any other reply to the SEC, acknowledging that they violated the Securities Act of 1933, which mandates registration for any investment offerings.
As per the orders, Impact Theory will pay a combined total of over $6.1 million, which includes returning the ill-gotten gains, prejudgment interest, and a civil penalty. The order also states creating a fair fund to reimburse the investors who bought the Founder’s Keys NFTs.
Impact Theory has also agreed to destroy all the Founder’s Keys in their possession and remove any potential royalty that can be earned from secondary market sales of the Founder’s Keys NFTs in the future.
The company will also publish notice of the order on all its official websites and social media channels to inform its users about the legal developments.
Impact Theory’s case serves as a stark reminder to the crypto companies that proper compliance amid the unsure regulations is necessary. The case also shows the tremendous candor of Impact Theory, as it accepted the responsibility for the accusations to create a healthy and trustworthy environment in the industry.
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