SEC vs NFTs

[zasad@]

https://www.sec.gov/news/press-release/2023-163
"Washington D.C., Aug. 28, 2023 —
The Securities and Exchange Commission today charged Impact Theory, LLC, a media and entertainment company headquartered in Los Angeles, with conducting an unregistered offering of crypto asset securities in the form of purported non-fungible tokens (NFTs). Impact Theory raised approximately $30 million from hundreds of investors, including investors across the United States, through the offering.

According to the SEC’s order, from October to December 2021, Impact Theory offered and sold three tiers of NFTs, known as Founder’s Keys, which Impact Theory called “Legendary,” “Heroic,” and “Relentless.”"
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The Securities and Exchange Commission has found a new target, apparently large whales are too tough for it. And how many such projects have been launched ... lol.

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[Hamza2424]

https://www.sec.gov/news/press-release/2023-163
"Washington D.C., Aug. 28, 2023 —
The Securities and Exchange Commission today charged Impact Theory, LLC, a media and entertainment company headquartered in Los Angeles, with conducting an unregistered offering of crypto asset securities in the form of purported non-fungible tokens (NFTs). Impact Theory raised approximately $30 million from hundreds of investors, including investors across the United States, through the offering.

According to the SEC’s order, from October to December 2021, Impact Theory offered and sold three tiers of NFTs, known as Founder’s Keys, which Impact Theory called “Legendary,” “Heroic,” and “Relentless.”
____
The Securities and Exchange Commission has found a new target, apparently, large whales are too tough for it. And how many such projects have been launched ... lol.

Last day I was reading this news, but I ignored it as it was related to the NFTs. I don't care whether the SEC act against the NFT projects or not because 99% of NFTs are just shit, this market in crypto is not at all productive except for a few use case scenarios, such as loyalty tokens, and authentication. Haha for SEC I feel sorry they put the hand in every hold and when they just try to bring some results they fail.

[RevealJS]

Agreed many NFT's have little long-term value, but they do have a good side. Many talented artists (some of whom would have no other way to sell their products) have found happy customers for their creative work. I hope the SEC doesn't try to claim all NFT's are securities, that would be way too Draconian, imo.

[Zoomic]

Agreed many NFT's have little long-term value, but they do have a good side. Many talented artists (some of whom would have no other way to sell their products) have found happy customers for their creative work. I hope the SEC doesn't try to claim all NFT's are securities, that would be way too Draconian, imo.

Recently, SEC is on the neck of almost every sector of cryptocurrency and it seems SEC is loosing recently the legal way. I don't think that SEC will claim that all NFTs are securities. If anybody needs to come into NFT for regulations it should be the body of Arts and not SEC.
NFTs have lived longer than I expected them to and it seems it is not leaving the market any moment unless there is a bigger pressure from SEC.

[yhiaali3]

. I hope the SEC doesn't try to claim all NFT's are securities, that would be way too Draconian, imo.

Based on the argument made by the SEC in the news link above:

The order finds that the NFTs offered and sold to investors were investment contracts and therefore securities. Accordingly, Impact Theory violated the federal securities laws by offering and selling these crypto asset securities to the public in an unregistered offering that was not otherwise exempt from registration.

This means they could use this same argument against almost all NFTs and claim that they are contracts and therefore securities.

The problem is that Impact Theory was very weak and did not object to the decision and agreed to pay a fine and harsh measures, according to the same news:

Without admitting or denying the SEC’s findings, Impact Theory agreed to a cease-and-desist order finding that it violated registration provisions of the Securities Act of 1933 and ordering it to pay a combined total of more than $6.1 million in disgorgement, prejudgment interest, and a civil penalty. The order also establishes a Fair Fund to return monies that injured investors paid to purchase the NFTs. Impact Theory agreed to destroy all Founder’s Keys in its possession or control, publish notice of the order on its websites and social media channels, and eliminate any royalty that Impact Theory might otherwise receive from future secondary market transactions involving the Founder’s Keys.

This is very bad and will open the door for the SEC to attack more NFTs companies.

[zasad@]

Agreed many NFT's have little long-term value, but they do have a good side. Many talented artists (some of whom would have no other way to sell their products) have found happy customers for their creative work. I hope the SEC doesn't try to claim all NFT's are securities, that would be way too Draconian, imo.

It turns out that the NFT token also comes in Utility and Security. But most NFT tokens are scams. There is no need to worry that all NFT tokens will be banned. Most of these projects will not survive this regulation because they do not have enough resources for the courts. And in principle, this is good for the crypto market, because after the precedent, similar projects will be closed.
Unlike coins, the price of NFT tokens is very easy to manipulate and reduce or increase tax profits.

[Fiatless]

The Securities and Exchange Commission has found a new target, apparently large whales are too tough for it. And how many such projects have been launched ... lol.

Businesses should ensure they abide by the laws or regulations before engaging in any form of business activity. Carrying out an unregistered business in not acceptable and SEC should not be blamed for going after them. I don't see it as a witch-hunt but the SEC is carrying out its regulative function. These NFT tokens need strong regulations because it has become a free market for scams.

[joniboini]

These NFT tokens need strong regulations because it has become a free market for scams.

It also brings negative PR to the crypto community as a whole. I've seen way too many people register NFT = scam = crypto, although I don't think relying on regulation is the best choice. At the end of the day, people's awareness is key to solving this issue, sadly most people just fall for them easily. As long as the SEC doesn't blindly define every token as NFT or every NFT needs their control, I also think what they are doing with this is okay. Not sure how long my opinion will stay the same though, since the SEC is unpreditable nowadays.

[zasad@]

The Securities and Exchange Commission has found a new target, apparently large whales are too tough for it. And how many such projects have been launched ... lol.

Businesses should ensure they abide by the laws or regulations before engaging in any form of business activity. Carrying out an unregistered business in not acceptable and SEC should not be blamed for going after them. I don't see it as a witch-hunt but the SEC is carrying out its regulative function. These NFT tokens need strong regulations because it has become a free market for scams.

I don't blame the SEC. The regulator usually works with the major violator to ensure that all minor violators of the law read the practice and try to comply with the regulator's requirements. The regulator should not kill projects, but regulate markets and indicate the rules to players. There are thousands of projects in this market that have violated US laws, but the SEC apparently has its own vision.

[Baofeng]

The Securities and Exchange Commission has found a new target, apparently large whales are too tough for it. And how many such projects have been launched ... lol.

Businesses should ensure they abide by the laws or regulations before engaging in any form of business activity. Carrying out an unregistered business in not acceptable and SEC should not be blamed for going after them. I don't see it as a witch-hunt but the SEC is carrying out its regulative function. These NFT tokens need strong regulations because it has become a free market for scams.

Yeah, but the thing though, crypto market is fairly young an we really don't know what's their regulation about the market itself. And we have seen them making contractions as well, so I will say that we are in the gray area as far as crypto or for SEC for that matter.

But if there are clear cut laws, then for sure NFT or projects are going to carry it out within the boundaries so that they won't violate any laws established. But for now, it seems that we are in the western type of era. SEC can swing at anyone they want, and then projects, some of them might be pulling out scams after scams.

[joniboini]

But if there are clear cut laws, then for sure NFT or projects are going to carry it out within the boundaries so that they won't violate any laws established. But for now, it seems that we are in the western type of era. SEC can swing at anyone they want, and then projects, some of them might be pulling out scams after scams.

I believe that is the key problem. No regulation certainty allows many things to happen, either abuse from the government or just scams running around with little to no incentive to stop them. Things like this should not last that long. I don't know why it takes so long for regulations to come out either, considering other countries already propose many bills to be approved. On the other hand, people need to improve their awareness so they don't have to rely on the law to avoid easy-to-spot scams like NFT airdrop, etc. CMIIW.

[bbc.reporter]

@zasad@. I predict that this will be another case where the SEC will try to stretch the securities laws but when the companies requests for guidance to avoid breaking the law, the SEC refuses to give it to them.

The SEC then will make an indictment, they will face a judge and this judge will do uncle Gary's job again for him and declare that these tokens are not by themselves securities.

[zasad@]

@zasad@. I predict that this will be another case where the SEC will try to stretch the securities laws but when the companies requests for guidance to avoid breaking the law, the SEC refuses to give it to them.

The SEC then will make an indictment, they will face a judge and this judge will do uncle Gary's job again for him and declare that these tokens are not by themselves securities.

Any official response can be used by crypto project lawyers against the SEC, so they don't say anything intelligible. Previously, the SEC was famous for having the best lawyers in the world and all companies were afraid to sue them, but now, if there are no other options, then big business will seek their rights in court, so I fully agree with you. Judicial practice will become law before laws are passed.

[Baofeng]

But if there are clear cut laws, then for sure NFT or projects are going to carry it out within the boundaries so that they won't violate any laws established. But for now, it seems that we are in the western type of era. SEC can swing at anyone they want, and then projects, some of them might be pulling out scams after scams.

I believe that is the key problem. No regulation certainty allows many things to happen, either abuse from the government or just scams running around with little to no incentive to stop them. Things like this should not last that long. I don't know why it takes so long for regulations to come out either, considering other countries already propose many bills to be approved. On the other hand, people need to improve their awareness so they don't have to rely on the law to avoid easy-to-spot scams like NFT airdrop, etc. CMIIW.

Yes, there is no clear regulations and that's why projects are taking advantage of it, be it they are going to scam or not. So at the end of the day, it boils down as to how and what will be the regulations and when it will be promulgated by the SEC or any governing body for that matter.

So for now, as I have said, it's free for all, but when crypto regulations are point into place by different countries, this scammers will have no way to steal money from crypto investors again.

[zasad@]

So for now, as I have said, it's free for all, but when crypto regulations are point into place by different countries, this scammers will have no way to steal money from crypto investors again.

Fraudsters will find a way to deceive an illiterate person, so the only way to lose money from the actions of scammers is to constantly improve your literacy and work with proven services.
It is better to make a deal and not get extra 2% than to lose the entire deposit.And a fool always loses a coin.

[bbc.reporter]

But if there are clear cut laws, then for sure NFT or projects are going to carry it out within the boundaries so that they won't violate any laws established. But for now, it seems that we are in the western type of era. SEC can swing at anyone they want, and then projects, some of them might be pulling out scams after scams.

I believe that is the key problem. No regulation certainty allows many things to happen, either abuse from the government or just scams running around with little to no incentive to stop them. Things like this should not last that long. I don't know why it takes so long for regulations to come out either, considering other countries already propose many bills to be approved. On the other hand, people need to improve their awareness so they don't have to rely on the law to avoid easy-to-spot scams like NFT airdrop, etc. CMIIW.

Yes, there is no clear regulations and that's why projects are taking advantage of it, be it they are going to scam or not. So at the end of the day, it boils down as to how and what will be the regulations and when it will be promulgated by the SEC or any governing body for that matter.

So for now, as I have said, it's free for all, but when crypto regulations are point into place by different countries, this scammers will have no way to steal money from crypto investors again.

However, securities frauds and scams also happen in traditional finance. The only difference is the scammers  in traditional finance are our rulers, the people who are fixing the game against you. They do not want the clowns like Arthur Hayes, CZ and Justin Sun to run the scams. They want to monopolize the scams and have all control and power over it.

[zasad@]

But if there are clear cut laws, then for sure NFT or projects are going to carry it out within the boundaries so that they won't violate any laws established. But for now, it seems that we are in the western type of era. SEC can swing at anyone they want, and then projects, some of them might be pulling out scams after scams.

I believe that is the key problem. No regulation certainty allows many things to happen, either abuse from the government or just scams running around with little to no incentive to stop them. Things like this should not last that long. I don't know why it takes so long for regulations to come out either, considering other countries already propose many bills to be approved. On the other hand, people need to improve their awareness so they don't have to rely on the law to avoid easy-to-spot scams like NFT airdrop, etc. CMIIW.

Yes, there is no clear regulations and that's why projects are taking advantage of it, be it they are going to scam or not. So at the end of the day, it boils down as to how and what will be the regulations and when it will be promulgated by the SEC or any governing body for that matter.

So for now, as I have said, it's free for all, but when crypto regulations are point into place by different countries, this scammers will have no way to steal money from crypto investors again.

However, securities frauds and scams also happen in traditional finance. The only difference is the scammers  in traditional finance are our rulers, the people who are fixing the game against you. They do not want the clowns like Arthur Hayes, CZ and Justin Sun to run the scams. They want to monopolize the scams and have all control and power over it.

This is an old philosophy. Russian hackers even say that bankers are the worst criminals in the world, and they are not even tormented by their conscience for stealing from bankers. It is even considered fair. Like Robin Hood, who took from the rich and gave to the poor.

[Husires]

, considering other countries already proHood, who took from the rich and gave to the poor.

As a person who wants to live a simple life, he has no choice but to comply with the legislation, as most of us cannot hide our wealth, which often appears in the form of an apartment, house, shop, or money in the bank, and it differs from the capabilities of whales, who can legally pay much less taxes than you.
It does not mean accepting all legislation, but trying to comply with it at a minimum and reduce identity verification.
The article mentioned that this NFT was sold in 2021, as that year witnessed a lot of chaos and exaggerated investment in NFTs, but I think that many are less prepared now.

[avikz]

If SEC is going after the NFT companies, they have my support! NFTs offer zero value and congests the network which pushes the transaction fees higher. Also NFT is a new way to launder money and syphon out funds. SEC has every right to protect their people.

Unlike cryptocurrency, NFT is basically a hype which only makes the owner rich. It's on the verge of dying.

[bbc.reporter]

@avikz. It is very arguable if NFTs offer zero value or not because for collectors, they offer cultural value and what the market appears to show us, they also offer financial value. The cryptospace might be redefining the idea of value very much similar to how money has value. It is an abstraction similar to how Pokemon cards have value for their collectors who are willing to buy, sell and trade them.

In any case, similar to what was mentioned, another judge might do the SEC's job for them and uncle Gary might lose another case.