Los Angeles-based media and entertainment firm, Impact Theory, has been charged by the U.S. Securities and Exchange Commission (SEC) over its unregistered sale of nonfungible tokens (NFTs).
The SEC Has Filed Charges Against Impact Theory
Los Angeles-based media and entertainment firm, Impact Theory, has been charged by the U.S. Securities and Exchange Commission (SEC) over its unregistered sale of nonfungible tokens (NFTs) known as "Founder’s Keys," which raised around $30 million from multiple investors.
The SEC found that the Founder’s Keys tokens, launched between October and December 2021 in three tiers—Legendary, Heroic, and Relentless—qualified as investment contracts and thus securities.
The company's NFT offering was categorized as securities, which mandates registration under the Securities Act of 1933 or eligibility for an exemption—neither of which the company adhered to.
Antonia Apps, director of the SEC's New York Regional Office, highlighted the significance of registration in safeguarding investor protection under established securities laws.
Impact Theory has consented to a cease-and-desist order and will pay over $6.1 million in disgorgement, prejudgment interest, and a civil penalty without acknowledging or disputing the SEC's findings.