SEC Says NFTs Sold by an LA-based Entertainment Firm Are Securities (fortune.com) 32
In an enforcement action announced on Monday, the Securities and Exchange Commission charged Los Angelesâ"based entertainment company Impact Theory with conducting an unregistered offering of securities via non-fungible tokens, or NFTs. From a report: As the SEC expands its definition of which types of crypto assets qualify as securities, the case breaks new ground by determining that NFTs fall under the agency's jurisdiction. "Absent a valid exemption, offerings of securities, in whatever form, must be registered," Antonia Apps, director of the SEC's New York Regional Office, said in a statement.
The question of whether NFTs qualify as securities has remained open for several years. Before the SEC weighed in, a lawsuit in the U.S. District Court for the Southern District of New York remained the highest-profile case to tackle the issue, with a group of NFT collectors suing Dapper Labs. The plaintiffs alleged that the crypto firm had earned hundreds of millions of dollars by selling unregistered securities. Although Dapper Labs motioned for the case to be dismissed last year, a judge ruled in February that it could move forward, concluding that it was "plausible" NFTs could qualify as securities.
The question of whether NFTs qualify as securities has remained open for several years. Before the SEC weighed in, a lawsuit in the U.S. District Court for the Southern District of New York remained the highest-profile case to tackle the issue, with a group of NFT collectors suing Dapper Labs. The plaintiffs alleged that the crypto firm had earned hundreds of millions of dollars by selling unregistered securities. Although Dapper Labs motioned for the case to be dismissed last year, a judge ruled in February that it could move forward, concluding that it was "plausible" NFTs could qualify as securities.
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Some people are so cowardly with respect to anything new.
Sometimes the aversion to new and different comes down to just being ignorant to the fact that the new way of doing something works just as well (or in many cases, better) than the old way. I recently replaced all my yard tools for their lithium-powered equivalents and actually thought it was kind of ironic seeing my neighbor still struggling to get his gas-powered weedeater to start.
However, when it comes to NFTs, nobody asked for a new high-tech way of selling gullible folks the Brooklyn Bridge.
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Look. Value (like beauty) is in the eye of the beholder.
If someone perceives something as valuable to them, it would be a violation of autonomy for me to disabuse them of that notion.
This area is too new for people to become certain about the value of certified first example of (artistic, literary, whatever) expression X.
After all, people highly value Muhammad Ali's and Sonny Liston's Boxing Gloves ($965,000), and Darth Vader's original Star Wars helmet ($898,420). Who's to argue?
Thir
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However with digital I have learned that anything can be copied perfectly and encryption is always broken sooner than you think. Like a lock on a house
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Firstly, regarding the ability to copy digital works/documents.
Here's a scenario.
Enlightened jurisdiction J (let's say a place where official paper documents keep getting destroyed by ever-more-common wildfires), decides to record the deeds (land titles) to properties as NFTs, and treat those as the legal document. More precisely, the NFT is a non-fungible assertion that starting on this date, this human/corporate identity owns this deed to this property.
So while the document-i
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No... a collectible NFT is about as far as you can get from being a security - Bitcoin itself is more security-like than one of those dumb bored apes. And to be clear; they're a stupid purchasing idea, But so is selling or buying rare comic books just in the hope of a value gain a dumb idea -- Selling a collectible speculating demand will go up, Even tricking people into thinking it will, is dastardly, but at no point does it make the item a security.
Securities specifically exclude things like col
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These NFTs weren't the you "own" the image variety, but were marketed as an investment.
This is a suspect claim, since they were always being described as keys that would Unlock exclusive access to the Company's services and management team [globenewswire.com] at different levels -- That would be a purchase of rights to access to a service (Like an exclusive transferrable subscription offered for a limited period of time --- Think like the "Legacy Unlimited grandfathered 4G plans that people would resell for thousands of $$
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Where do you see a representation made by the company That buyers are bidding on the right to some kind of rights to a profit or financial stake in the business?
Anything that crossed the line was likely scrubbed as soon as they received notification of the SEC investigation and after the lawyers archived it as required. For instance in that press release that you linked to there is a link to a Dropbox file for "Impact Founder's Key Roadmaps" and is now a "Dropbox - File Deleted" return. The SEC has the contents of what was in there and from the discord server, but all of that is no longer available for the public to review.
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Anything that crossed the line was likely scrubbed as soon as they received notification of the SEC investigation
Probably not.. What they do in announcing a NFT is in the public sphere, and They don't discuss Equity in their business as part of what they sell -- they're all about "building a community". There is ample 3rd party coverage [youtube.com] of the essence of the Nft and their business (Which is essentially a Content creation franchise they are trying to make -- and the way FounderKeys were said to profit is
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This needs to be placed much higher. The fact that the promises made about these NFTs distinguishes them from all the NFTs that were marketed as collectables is why the SEC is pouncing. Of course, the absurdly generic term "non-fungible tokens" is already stupid as hell. If you are selling an alleged "art collectible pointer" on a "blockchain" using a type of unique token that can't be broken down further, maybe the term you use to discuss it should be based on the fact that it's some kind of allegedly c
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No... a collectible NFT is about as far as you can get from being a security
Securities are a hugely wide category and they include, for example, swaps, in which you agree with someone else that you will get their payments for something and they will get yours (if any). In this particular case, the person selling you a Bored Ape NFT claims ownership over copyrights on some image of an ape and that that copyright is valuable. They take your "money" (normally bitcoins) in exchange for assigning the NFT to you and with it the rights to any benefits, such as copyright royalties, on the
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for example, swaps, in which you agree with someone else that you will get their payments for something and they will get yours (if any). In this particular case
Swaps are not securities -- they are in the vein of commodities, and the SEC couldn't regulate them, Except that there is Additional law within the Dodd Frank act providing that the SEC to regulate swaps which based on securities, such as Stock swaps. Stock swaps are not securities, but an extra law was passed that provides the SEC shall regula
Re: NFT's are now securities, but always have been (Score:2)
No... a collectible NFT is about as far as you can get from being a security - Bitcoin itself is more security-like than one of those dumb bored apes.
In the US, a security is any tradable financial asset. NFTs are tradable, and they are being traded as financial assets. Therefore, they are a security. The fact they're based on a collectible or work of art is irrelevant: in fact there are artwork-based securities. Those securities are generally based on a portfolio of artwork, but one could conceivably make, say, a Mona Lisa security that represented a fractional ownership of the Mona Lisa. The artwork or collectible itself is not a security (in much the
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NFT 's have always been a scam
NFTs are not a scam. All the information is on the table. Just because people are stupid enough to buy them doesn't mean they are "scammed". They're just plain stupid.
at any time, they can delete the file and 404 your NFT at will.
That has little to do with why NFTs are stupid. Very few have become worthless because a file was deleted.
Its good that this makes them illegal under securities law
They are not illegal.
its now illegal to buy or sell these.
No, it isn't.
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NFT 's have always been a scam
NFTs are not a scam. All the information is on the table. Just because people are stupid enough to buy them doesn't mean they are "scammed". They're just plain stupid.
Yes, they are. No it's not. Yes people are (very) stupid but companies absolutely mislead people on the meaning, viability, and purpose. More so, when dealing with securities there's oodles of rules and disclosure requirements. Just because you say something isn't a security, thus exempt, doesn't make that true...even if you genuinely believed it so but the SEC disagreed at a later date. Such is the power of the SEC.
at any time, they can delete the file and 404 your NFT at will.
That has little to do with why NFTs are stupid. Very few have become worthless because a file was deleted.
True and true but doesn't change the possibility. The SEC doesn't play 'it'll be fine,
Dear SEC (Score:2)
Dear SEC,
I take it your statement about this has cost you some monetary amount of time. I think that time was sold to you by some clever lawyers of yours. Therefore, the press release itself is a form of a security. How much would you like to offer it for? I'm willing to buy it.
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(Nearly everything can be considered a security in the right frame of reference.)
I live in (non US country X) (Score:2)
U.S. SEC can f@ck off.
Re:I live in (non US country X) (Score:5, Insightful)
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Granted that you have a personal choice of what to do . . .
Depending on your (non US) country, there may be a treaty or treaties wth the U.S. that would impact your transaction.
Also, some non-U.S. (EU?) countries would require you as their citizen to report etc.
trump nft (Score:2)
I guess this means Trump will get yet another lawsuit. This time for selling securities without a permit.
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Trump don't have much to worry about. The issue with this company is SEC views the 30m they raised as an investment contract in their business in a strange sort of way; since they were promising founders Perks in exchange for purchase of the things to be used to actually fund the development of products and services.
And they didn't pay the SEC that $100 per $1million raised Fee to register, Therefore: just like the IRS.. the SEC gonna chase them down to the end of the earth.
Take $6.1 fine, and then th
What? (Score:2)
Do art galleries sell securities too?
Get the popcorn (Score:2)
Heads: the SEC loses because the courts ROFLOL at the idea of NTFs being a legally binding form of property ownership over a particular thing.
Tails: the SEC accidentally gets the court to legally validate the whole industry as a concept and unleashes something they're not prepared to handle.
So is all "art" now a security? (Score:1)
If selling NFT (basically a piece of digital art) is now a 'security', that would imply regular 'art' is a security as well, falling under the SEC.
Securities are a reflection of the changing performance and value of the entity they represent. Almost everything is a security with that definition; lobsters, pearls, brand name bottled water, Hunter Biden's art pieces, those are all things that change both the performance and value of the entity they represent.
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NFT (basically a piece of digital art)
An NFT is a piece of digital art in a similar way to how a receipt for a poster is a piece of art.
All well and good, except... (Score:2)