- The SEC found that Impact Theory misrepresented the NFTs as valuable investments, comparing them to Disney.
- The company agreed to an official order to stop selling NFTs and pay over $6.1 million, including a fine.
- A “Fair Fund” will be established to refund investors.
The Securities and Exchange Commission (SEC) has taken some serious steps against Impact Theory, a company in Los Angeles that works in media and entertainment. It turns out that Impact Theory did something wrong. They offered special digital items called non-fungible tokens (NFTs) without going through the proper channels.
These NFT things were sold as a kind of investment from October to December 2021, and they had different levels or tiers “Legendary,” “Heroic,” and “Relentless” versions called “Founder’s Keys.” Impact Theory managed to get about $30 million from lots of investors, including some from the United States.
Impact Theory was telling people that if they bought these NFTs, they were investing in the company’s business. They said if the company did well, the NFT buyers would make money. Impact Theory even compared themselves to Disney and said the NFTs would be really valuable.
But the SEC decided that these NFTs were actually like investment contracts, which are kind of like securities. And when you’re dealing with securities, there are rules to follow. Impact Theory didn’t follow those rules – they didn’t register these NFT securities properly, and they didn’t qualify for any exceptions.
Antonia Apps, who’s in charge of the SEC’s New York Regional Office, said that any time you’re offering securities, you usually have to register them unless there’s a special reason not to. Not registering means that the people who might invest don’t get the protections that come with the rules.
Even though Impact Theory didn’t exactly admit they did something wrong, they agreed to a sort of official order that tells them to stop what they were doing. They also have to pay more than $6.1 million. That money includes paying back what they got from the NFT sales, plus extra because they did this before the SEC gave them permission. There’s also a fine.
There’s going to be something called a “Fair Fund” set up. This is meant to give back money to the people who bought these NFTs. Impact Theory has promised to destroy all the NFTs they still have control over. They’re also going to tell people about what happened on their websites. And they won’t take any future money from these NFTs if they get sold again.