TL; DR
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The SEC subsequently sued Impact Theory, alleging that the company was encouraging buyers to view their NFTs as investments in its future business.
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Impact Theory settled out of court with the SEC for $6.1 million, agreeing to decommission the founder’s key NFTs and refund customers who bought them (to the tune of $30 million).
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What does this mean for the NFT space? The core value of NFTs is that they are immutable, unchanging and persistent over time. This case contradicts that.
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Our estimate is: this won’t end up being a blanket attack on all NFTs, just NFT projects that can be legally framed as securities (here’s what exactly that means).
Full story
If someone bets you $10,000 that you can’t do a standing backflip and you decline, it’s because:
A) 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 is 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 conversations, etc.)
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The SEC subsequently sued Impact Theory, alleging that the company was encouraging buyers to view the NFTs as investments in its future business.
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If this could be proven in court, the founder’s Key NFTs securities would…not registered certainties therein
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That’s a big no-no in virtually all modern financial systems
…but here’s the thing.
This never came to trial.
Impact Theory settled out of court with the SEC for $6.1 million, agreeing to decommission the founder’s key NFTs and refund customers who bought them (to the tune of $30 million).
In return, Impact Theory did not have to admit or deny any allegations.
The question we will probably never have an answer to is this:
Did the SEC have a legal leg to stand on?
Or was it just a gamble that the Impact Theory team didn’t want to take, so they opted to skip the metaphorical standing backflip and settle?
The main question is this:
What does this mean for the NFT space? The core value of NFTs is that they are immutable, unchanging and persistent over time.
This case contradicts that.
Our estimate is: this won’t end up being a blanket attack on all NFTs, just NFT projects that can be legally framed as securities (here’s what exactly that means).
Let’s all cross our fingers/toes and hope we’re right.
