TL;DR
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The SEC then sued Impact Theory claiming the company encouraged buyers to think of their NFTs as investments in its future business.
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Impact Theory settled with the SEC outside of court for $6.1M, agreeing to decommission its Founder’s Key NFTs and reimburse customers who bought them (to the tune of $30M).
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What does this mean for the NFT space? The core value pitch of NFTs is that they’re immutable, unchangeable, and persistent throughout time. This case flies in the face of that.
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Our guess is: this won’t end up being a blanket attack on all NFTs, only NFT projects that can be legally framed as securities (here’s what that means exactly).
Full Story
If someone bets you $10,000 that you can’t do a standing backflip and you refuse, is it because:
A) You can’t do a standing backflip?
Or
B) You don’t want to risk losing $10,000?
Answer: we have no idea! Only you know the truth of it all.
There’s a similar sense of mystery surrounding this Impact Theory vs. SEC case.
Here’s what you need to know:
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The Impact Theory team are trying to “build the next Disney”
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In December 2021, the company released its ‘Founder’s Key’ NFT collection
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Each NFT would unlock “the future of all things Impact Theory” (think: access to giveaways, online communities, one-on-one calls etc.)
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The SEC then sued Impact Theory claiming the company encouraged buyers to think of the NFTs as investments in its future business
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If provable in court, this would have made the Founder’s Key NFTs securities…unregistered securities at that
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That’s a big no-no in pretty much all modern financial systems
…but here’s the thing.
This never went to trial.
Impact Theory settled with the SEC outside of court for $6.1M, agreeing to decommission its Founder’s Key NFTs and reimburse customers who bought them (to the tune of $30M).
In return, Impact Theory didn’t have to admit or deny any of the charges.
The question we’ll likely never have an answer to is this:
Did the SEC have a legal leg to stand on?
Or was it simply a gamble the Impact Theory team weren’t willing to take, so they opted to skip the metaphorical standing backflip and settle?
The more important question is this:
What does this mean for the NFT space? The core value pitch of NFTs is that they’re immutable, unchangeable, and persistent throughout time.
This case flies in the face of that.
Our guess is: this won’t end up being a blanket attack on all NFTs, only NFT projects that can be legally framed as securities (here’s what that means exactly).
Let’s all cross our fingers/toes and hope that we’re right.
