The U.S. Securities and Exchange Commission (SEC) has taken its first enforcement action related to Non-Fungible Tokens (NFTs), ordering a Los Angeles-based company to compensate investors who purchased the NFTs. The SEC found that the transactions were illegal unregistered securities offerings.
Impact Theory, a California-based media company, raised nearly $30 million from three tiers of NFT offerings that the SEC deemed to be securities. According to the SEC order, Impact Theory encouraged potential investors to view the purchase of a Founder’s Key as an investment into the business, stating that investors would profit from their purchases if Impact Theory was successful.
In response to the SEC’s findings, Impact Theory has agreed to set up a fund to reimburse investors who purchased the NFTs and destroy any NFTs that remain in its possession. The company will also pay more than $6.1 million in penalties to federal regulators.
The SEC’s action does not suggest that all NFTs are considered securities, limiting the potential consequences of the action.