SEC charges podcaster in first unregistered securities sales claim against NFT offering
The United States Securities and Exchange Commission (SEC) has charged a media and entertainment company with conducting unregistered securities sales when it sold nonfungible tokens (NFTs) to investors between October and December 2021.
Impact Theory, a Los Angeles-based company that produces entertainment and educational content, including several podcasts, allegedly raised almost $30 million through the sales of NFTs it called Founder’s Keys, which were offered in three tiers.
The company “encouraged potential investors to view the purchase of a Founder’s Key as an investment into the business,” according to the SEC, and:
The SEC found that the NFTs were investment contracts, and so securities, and the company violated the Securities Act of 1933 by selling them without registration. It issued a cease-and-desist order that Impact Theory has agreed to.
Related: Get ready for the feds to start indicting NFT traders
Under the SEC order, the company was ordered to pay a total of more than $6.1 million in disgorgement, prejudgment interest and a civil penalty, without admitting or denying the agency’s findings. Further, a fund will be created to return money to investors in Founder’s Key NFTs. Impact Theory will destroy all Founder’s Keys in its possession or control, publish a notice of the order on its websites and social media channels, and not receive royalties from future sales of the NFTs on the secondary market.
According to NFT Stats, a “Legendary” (top) tier Founder’s Key NFT last sold two days ago for $1,468 as one of ten sales in the last week. The token supply is 13, 572, with 4,620 owners. The Founder’s Key is only one suite of NFTs the company offers. They did not respond to a Cointelegraph enquiry by the
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