{"id":21678,"date":"2023-08-29T10:22:53","date_gmt":"2023-08-29T10:22:53","guid":{"rendered":"https:\/\/nftandcrypto-news.com\/crypto\/crypto-lawyer-about-sec-problematic-to-imply-all-nfts-are-securities\/"},"modified":"2023-08-29T10:22:55","modified_gmt":"2023-08-29T10:22:55","slug":"crypto-lawyer-about-sec-problematic-to-imply-all-nfts-are-securities","status":"publish","type":"post","link":"https:\/\/nftandcrypto-news.com\/crypto\/crypto-lawyer-about-sec-problematic-to-imply-all-nfts-are-securities\/","title":{"rendered":"Crypto lawyer about SEC: \u2018Problematic to imply all NFTs are securities\u2019"},"content":{"rendered":"

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The United States Securities and Exchange Commission\u2019s (SEC) first enforcement action on a nonfungible token (NFT) project triggered responses from community members, pointing out how the decision could be “problematic,” and how many NFT projects fit the description and may be next on the SEC\u2019s hit list.\u00a0<\/p>\n

On Aug. 28, the SEC charged the entertainment company Impact Theory for allegedly conducting the sales of unregistered securities. According to the SEC, the NFTs called \u201cFounder\u2019s Keys\u201d were sold as an \u201cinvestment into the business.\u201d The company allegedly raised around $30 million through the sales. <\/p>\n

The SEC believes that the NFTs that were sold were investment contracts and qualified as securities. The filing noted that the firm violated the Securities Act of 1933 for selling the NFTs without registration. <\/p>\n

Not everyone agrees with the SEC\u2019s decision. On Aug. 28, SEC commissioners Hester Peirce and Mark Uyeda also wrote their dissenting statement against the SEC\u2019s action. The duo argued that the \u201chandful of company and purchaser statements cited by the order are not the kinds of promises that form an investment contract.\u201d<\/p>\n

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The SEC filed and settled its first NFT enforcement action today: https:\/\/t.co\/RwaMGueBZK Here’s Commissioner Uyeda’s and my dissent: https:\/\/t.co\/WhLKX3Tl8X<\/p>\n

\u2014 Hester Peirce (@HesterPeirce) August 28, 2023<\/a><\/p><\/blockquote>\n

In addition, the SEC commissioners also highlighted that the SEC does not routinely bring enforcement actions against the sellers of \u201cwatches, paintings, or collectibles\u201d that also give out vague promises to \u201cbuild the brand\u201d and increase the resale value of the items.\u00a0<\/p>\n

Apart from this, the event triggered responses from community members saying that many NFT projects fit the description put out by the SEC. According to a researcher from the popular NFT collection Azuki, the case may be a big deal as some of the details may apply to \u201cquite a few\u201d NFT projects out there. <\/p>\n

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The SEC suing Impact Theory for selling NFT securities is a pretty big deal.<\/p>\n

Because if you take a closer look at the details, the description applies to quite a few NFT projects – probably also to one you are holding right now. pic.twitter.com\/75kY0QQIDG<\/a><\/p>\n

\u2014 wale.swoosh (@waleswoosh) August 28, 2023<\/a><\/p><\/blockquote>\n

Other members of the community posted<\/a> that many NFT project founders put out messaging that\u2019s very similar to what Impact Theory put out that encourages potential buyers and promising profit as the project succeeds.\u00a0<\/p>\n

Related: <\/em><\/strong>\u2018XRP is not a security. Period\u2019 \u2014 Crypto lawyers on Ripple\u2019s case amid SEC appeal<\/em><\/strong><\/p>\n

Amid the issue, Cointelegraph reached out to Oscar Franklin Tan, the chief legal officer of NFT platform Enjin to dive deeper into the SEC\u2019s recent action against NFTs. According to Tan, it\u2019s very problematic to say that all NFTs are securities. Tan explained: <\/p>\n

\u201cWe must ensure that the SEC order does not hold back creators from trying the spectrum of Web3 economic and social models. It is problematic to imply that all NFTs are securities because NFTs are a technology and can mean an infinite number of things, from a graphic to a health record to a land title.\u201d<\/p><\/blockquote>\n

The lawyer also shared that the confusion is everywhere. Tan said he was also recently asked if it was illegal to give away a proof-of-attendance protocol NFT at a fashion show. Tan believes that the lack of clear rules will \u201cdiscourage creators from trying Web3 models\u201d and that it will lead to the space never discovering the full benefits of Web3.\u201d<\/p>\n

The legal officer also called for better regulatory clarity from the SEC saying that there are a lot of possible models and \u201ccreators should not have to wonder whether they created an investment product.\u201d <\/p>\n

This case is not the first time that NFTs came close to being considered as securities. On Feb. 22, a United States judge said in a ruling that NBA Top Shot NFTs may qualify as securities as they may create a \u201csufficient legal relationship between investors and promoter to establish an investment contract.\u201d<\/p>\n

Magazine: <\/em><\/strong>Recursive inscriptions: Bitcoin \u2018supercomputer\u2019 and BTC DeFi coming soon<\/em><\/strong><\/p>\n<\/div>\n