An SEC First: NFTs are Sold as Securities
By Drew Hinkes, Eden Rohrer, and Josh Durham
On 28 August 2023, in its first enforcement action for securities registration violations brought against an issuer of NFTs, the SEC settled with media and entertainment company, Impact Theory, LLC (Impact).
The settlement order included findings that from 13 October 2021 to 6 December 2021, Impact sold non-fungible tokens called Founder’s Keys (KeyNFTs) raising approximately US$30 million. Broadly interpreting Howey, the SEC found that the NFTs were sold in investment contracts, based on the company’s public statements about the expected rise in value of the NFTs and its use of profits from sales to develop the company.
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