One noteworthy news this week: The SEC charged Impact Theory with an unregistered offering of NFTs.
Context: Impact Theory is founded by Tom Bilyeu, an entrepreneur and co-founder of Quest Nutrition. Impact Theory sold $30M worth of its “Founders key’ NFT in October 2021. I remember it was a pretty hyped project, with the founder going on a media circuit to promote it prior to the launch.
The takeaway here is not that NFTs are securities. Rather, how it was marketed was the issue: saying that buyers could expect “tremendous returns” and that it was “building the next Disney”.
Not a lawyer, but some quick takeaways:
Projects that did aggressive marketing and made similar type of promises during their mint may be liable for SEC action. NFT owners should consider if they own NFTs of these projects.
Projects that are launching NFTs in the future need to be extremely careful about their communications and avoid any wording that could be interpreted as as investment contract : on Tweets, on the website, in Discord.
There have been some pushbacks on this enforcement action and the application of the Howey analysis. But as of now, it’s better to be safe than sorry.
Press Release link: https://www.sec.gov/news/press-release/2023-163