Source: https://www.linkedin.com/feed/update/urn%3Ali%3Ashare%3A6985770311233265665
Bloomberg LP US SEC Investigates Bored-Ape’s Yuga Labs Unregistered Digital Assets Sales: https://lnkd.in/g_yx7KUJ
#SEC #DigitalAssets #BoredApes #YugaLabs #NFT #Security #Crypto #Coins #Tokens #Regulation #Audit #Federal #Laws #Stocks
The U.S. Securities and Exchange Commission is investigating Yuga Labs Inc., the creator of the popular #BoredApeYachtClub collection of NFTs, over whether #sales of its #digital #assets violate federal law. The SEC is examining whether certain #nonfungible #tokens from the Miami-based company are more akin to #stocks and should follow the same #disclosure #rules. SEC is also examining the #distribution of #ApeCoin, and related #NFTs. The #cryptocurrency was created in part for #web3, a vision of a #decentralized #internet built around #blockchains.
The investigation is the latest attempt by SEC Chair #GaryGensler to ensure the #crypto #market adheres to its #regulations who has repeatedly said that most #crypto #assets should be regulated by the agency since they have #characteristics of #securities as defined by a 1940s #SupremeCourt decision. That ruling gave the #agency #authority to label #investments as #securities when there’s an #expectation of #profit from management: leading to recent #enforcement #cases against digital asset firms for failing to register their offerings.
NFTs are digital assets used to denote #ownership of items such as #paintings or #sports #memorabilia. The #tokens can also serve as #certificates of #authenticity that can’t be replicated. The SEC has been probing the NFT market broadly, including the #crypto #exchanges where they #trade. As part of review, the SEC is investigating so-called #fractional #NFTs, which involve breaking down the assets into units that can be easily bought and sold.
The SEC is also investigating whether #ApeCoin, which was distributed to certain #holders of #BoredApe NFTs, is tantamount to a #security. ApeCoin gives holders influence over another crypto-native entity known as a #decentralized #autonomous #organization, or #DAO. The idea was to give the Bored Ape community a hand in shaping the decentralized, #blockchain-powered vision of the #internet that #venturecapitalists often describe as #web3. The Bored Ape #DAO will use the #blockchain to #enable and #record #votes on #decisions related to how the community is managed.
The key #legal #question is whether NFTs are #securities as defined by the agency. The SEC applies the so-called #Howey #test, which comes from a 1946 US Supreme Court decision, to decide if something is a security. Under that framework, an asset generally falls under the agency’s remit when it involves investors kicking in money to fund a company with the intention of profiting from the efforts of the organization’s leadership.
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