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<p><strong>The SEC continues harassing the digital world, now targeting Impact Theory and NFTs.</strong></p> 
<h2 style="text-align: center;" id="next-target-the-nft-market">Next Target: The NFT Market?</h2> 
<p>The United States Securities and Exchange Commission (SEC) <a href="https://www.sec.gov/news/press-release/2023-163" target="_blank" rel="noopener noreferrer nofollow">has taken action against media and entertainment company</a> Impact Theory for selling nonfungible tokens (NFTs) without proper registration. This move marks the SEC’s first involvement in the NFT market and raises questions about the classification of NFTs as securities.</p> 
<h2 style="text-align: center;" id="impact-theory-s-unregistered-nft-sales">Impact Theory’s Unregistered NFT Sales</h2> 
<p>Impact Theory, based in Los Angeles, produces entertainment and educational content, including podcasts. Between October and December 2021, the company sold NFTs known as “Founder’s Keys,” offering them in three tiers – Legendary, Heroic, and Relentless. These NFTs were presented to potential investors as an opportunity to invest in the company’s future success, likening it to “building the next Disney.” The SEC claims that these NFTs were, in fact, investment contracts and securities.</p> 
<blockquote class="twitter-tweet"> 
 <p dir="ltr" lang="en">🚨SEC Charges Impact Theory for Unregistered Offering of NFTs</p> 
 <p>As the first NFT settlement, this has BIG ramifications for Web 3 and the NFT Industry:</p> 
 <p>🗒️Details of Charges:</p> 
 <p>1) Impact Theory raised approximately $30 million from hundreds of investors, including those across the… <a href="https://t.co/wvlGSZ5dqT" rel="noopener noreferrer nofollow">pic.twitter.com/wvlGSZ5dqT</a></p> 
 <p>— BenJammin.eth 🍌 (@xBenJamminx) <a href="https://twitter.com/xBenJamminx/status/1696218116060074278?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">August 28, 2023</a></p> 
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<h2 style="text-align: center;" id="sec-s-finding-and-consequences">SEC’s Finding and Consequences</h2> 
<p>The SEC determined that Impact Theory’s Founder’s Keys NFTs met the criteria for investment contracts and, therefore, securities under the Securities Act of 1933. As a result, the company violated the law by selling these securities without proper registration. To address this violation, Impact Theory has agreed to a cease-and-desist order from the SEC.</p> 
<blockquote class="twitter-tweet"> 
 <p dir="ltr" lang="en">Join <a href="https://twitter.com/TomBilyeu?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">@TomBilyeu</a> in the IT Community Discord for a Community call at 1pm (PT) 👉 <a href="https://t.co/9MUQxgh17E" rel="noopener noreferrer nofollow">https://t.co/9MUQxgh17E</a> <a href="https://t.co/msiNUfzwa8" rel="noopener noreferrer nofollow">https://t.co/msiNUfzwa8</a></p> 
 <p>— FoundersKey.io (@FoundersKeyIO) <a href="https://twitter.com/FoundersKeyIO/status/1696216045584015801?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">August 28, 2023</a></p> 
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<h2 style="text-align: center;" id="penalties-and-remedies">Penalties and Remedies</h2> 
<p>In response to the SEC’s order, Impact Theory is obligated to pay over $6.1 million in penalties, disgorgement, and interest. The company will also establish a Fair Fund to return the money to investors who purchased Founder’s Keys NFTs. Additionally, Impact Theory will no longer receive royalties from secondary market transactions involving these NFTs. The company will also destroy all unsold Founder’s Keys and publicly acknowledge the SEC order on its online platforms.</p> 
<blockquote class="twitter-tweet"> 
 <p dir="ltr" lang="en">SEC charges Impact Theory for ‘unregistered NFT offering,’ expanding enforcement actions to NFT market</p> 
 <p>The Securities and Exchange Commissi…<a href="https://t.co/zCFbVuHR2b" rel="noopener noreferrer nofollow">https://t.co/zCFbVuHR2b</a></p> 
 <p>— Random Tech (@darkkmooon) <a href="https://twitter.com/darkkmooon/status/1696235018367213598?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">August 28, 2023</a></p> 
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<h2 style="text-align: center;" id="different-regulatory-perspectives">Different Regulatory Perspectives</h2> 
<p>While the SEC treats NFTs as securities, some <a href="https://walletinvestor.com/magazine/europes-first-spot-bitcoin-etf-lists-in-amsterdam" target="_blank" rel="noopener noreferrer nofollow">European regulators</a>, like the German Financial Supervisory Authority, hold a different view, stating that NFTs are not securities. This disparity highlights the global challenge in regulating and categorizing NFTs and other crypto assets.</p> 
<h2 style="text-align: center;" id="conclusion">Conclusion</h2> 
<p>The SEC’s actions against Impact Theory serve as a precedent for enforcing securities laws within the NFT market. The classification of NFTs as securities is a subject of debate among regulators, and this case raises important questions about how different jurisdictions approach this issue. As the NFT market continues to evolve, regulatory clarity and consistency will be essential to ensure investor protection and market integrity.</p>

SEC Charges Impact Theory for Unregistered NFT Offering

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