The SEC Takes the Fun out of Non-Fungible

This week we discuss the SEC, NFTs, and other TLA's (Three-Letter Acronyms) Monday, August 28th marked another milestone in the SEC’s quest to exercise control over the rapidly expanding crypto space. The Commission charged L.A.-based media company Impact Theory, LLC for selling unregistered securities in the form of non-fungible tokens (NFTs). The SEC argues that Impact Theory’s “Founder’s Keys”—which it used to raise $30 million in capital—qualify as investment contracts. If this is indeed an accurate assessment, that would have placed the onus on the issuer of this NFT to register as a security with the SEC. For those who have been paying attention, this should all sound very familiar. The action follows closely behind the flurry of lawsuits around the alleged issuance and/or exchange of unregistered cryptocurrency tokens.