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SEC charges Impact Theory for unregistered offering of NFTs

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Re: SEC charges Impact Theory for unregistered offering of NFTs

#21

Post by yieldcrv »

lukev wrote: post #8
yieldcrv wrote: post #3

Its great to see commissioner Mark T Uyeda also dissenting, because for some time it was only Hester Pierce that would take these views on digital assets, and for her views to be elevated to head commissioner it requires a Republican President to make that nomination, as she is Republican. There are many people that are not Republican that would aim to get her appointed and do whatever it takes. Which means casting a…

I agree that the dissenters bring up a lot of good questions that need answering. However, if you believe their fundamental argument that NFTs aren't really securities... what regulatory body should prevent this kind of behavior? Or should rug-pulls effectively be legal, and buyer beware?

The Federal Trade Commission is fully equipped to handle consumer fraud.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#22

Post by pizzalife »

jermaustin1 wrote: post #7

The concept of NFTs stored on a distributed ledger makes sense to me especially for the shitty games that sell skins. The idea they have some sort of value and can be considered a security, doesn't really. It is no different than the current in-game marketplaces that sell/resell skins from whatever game has skins this week. At what point does a thing you buy or sell become a security? Are baseball cards a security? S…

>At what point does a thing you buy or sell become a security? Are baseball cards a security? Should my local baseball card shop be closed down as an unregistered securities broker?

Does your local baseball card shop advertise the cards as an investment that will increase in value? From the link: "Impact Theory sold almost $30 million of NFTs along with making loud promises that the NFTs would increase in value".

>I don't own crypto or NFTs, so maybe I'm just not informed enough?

This is a bad-faith "I'm just asking questions" comment and every negative post about cryptocurrency stuff has comments like yours.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#23

Post by yieldcrv »

gumby wrote: post #9
yieldcrv wrote: post #3

Its great to see commissioner Mark T Uyeda also dissenting, because for some time it was only Hester Pierce that would take these views on digital assets, and for her views to be elevated to head commissioner it requires a Republican President to make that nomination, as she is Republican. There are many people that are not Republican that would aim to get her appointed and do whatever it takes. Which means casting a…

Are SEC commissioner assignments explicitly partisan as are, for example, FCC commissioners, or are the less so like the Federal Reserve governors?

The partisan assignments are explicitly partisan, but independents can be appointed too. There is a limit to how many commissioners can be from a single party.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#24

Post by lukev »

yieldcrv wrote: post #21
lukev wrote: post #8

Earlier quoted context omitted.

I agree that the dissenters bring up a lot of good questions that need answering. However, if you believe their fundamental argument that NFTs aren't really securities... what regulatory body should prevent this kind of behavior? Or should rug-pulls effectively be legal, and buyer beware?

The Federal Trade Commission is fully equipped to handle consumer fraud.

But if it's not a security, is it fraud?

If I sell you a hand drawn stick figure for $100, and you buy it because it's "art", then there's no rug to pull. You bought it, and it doesn't matter to the artist whether the resale value goes up or down. If it goes down, it's still not fraud.

But if I sell you a hand drawn stick figure for $100, and you buy it with the mutual expectation that it will eventually be worth more because of the value of the brand/project, and the effort I put in to grow that value... isn't that a security, by definition?

Re: SEC charges Impact Theory for unregistered offering of NFTs

#25

Post by playday »

evilantnie wrote: post #20
jermaustin1 wrote: post #7

The concept of NFTs stored on a distributed ledger makes sense to me especially for the shitty games that sell skins. The idea they have some sort of value and can be considered a security, doesn't really. It is no different than the current in-game marketplaces that sell/resell skins from whatever game has skins this week. At what point does a thing you buy or sell become a security? Are baseball cards a security? S…

From what I'm reading here, the company misled "investors" by attaching the NFT to ownership in the company, which would be considered a security. "The order finds that Impact Theory encouraged potential investors to view the purchase of a Founder’s Key as an investment into the business, stating that investors would profit from their purchases if Impact Theory was successful in its efforts." When I purchase a baseba…

With baseball cards, You have an expectation that the MLB will continue to promote and develop Baseball as a top sport. You purchased an illegal security.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#26

Post by lukev »

bonestamp2 wrote: post #12
lukev wrote: post #8

Earlier quoted context omitted.

I agree that the dissenters bring up a lot of good questions that need answering. However, if you believe their fundamental argument that NFTs aren't really securities... what regulatory body should prevent this kind of behavior? Or should rug-pulls effectively be legal, and buyer beware?

If NFTs are not securities, then I believe it would fall on the FTC, like most other consumer protections.

But what law is being broken, if NFTs aren't securities?

Re: SEC charges Impact Theory for unregistered offering of NFTs

#27

Post by mattdesl »

RC_ITR wrote: post #18
jermaustin1 wrote: post #7

The concept of NFTs stored on a distributed ledger makes sense to me especially for the shitty games that sell skins. The idea they have some sort of value and can be considered a security, doesn't really. It is no different than the current in-game marketplaces that sell/resell skins from whatever game has skins this week. At what point does a thing you buy or sell become a security? Are baseball cards a security? S…

This comes back to the core problem of crypto though - I agree that transferring skins would be cool or whatever, but distributed consensus does almost nothing to accomplish that. A game developer already has to opt-in to the NFT system and then maintain indefinite support for the NFT system, so if you trust them to do that why don’t you also trust them to maintain the ownership ledger?

There’s a lot of reasons this mechanism would be interesting for a game developer besides trust. e.g. mitigating payment processor fees.

But to your question of trust, one interesting application would be in distributed & decentralized games intended to be released to the commons, see Dark Forest or Lattice.xyz. For these OSS projects, even if the original game devs decided to stop development, the community could permissionlessly continue to build atop the game’s immutable contracts.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#28

Post by misnome »

playday wrote: post #25
evilantnie wrote: post #20

Earlier quoted context omitted.

From what I'm reading here, the company misled "investors" by attaching the NFT to ownership in the company, which would be considered a security. "The order finds that Impact Theory encouraged potential investors to view the purchase of a Founder’s Key as an investment into the business, stating that investors would profit from their purchases if Impact Theory was successful in its efforts." When I purchase a baseba…

With baseball cards, You have an expectation that the MLB will continue to promote and develop Baseball as a top sport. You purchased an illegal security.

Do they promise you when buying them that they will gain in value if the sport does well?

Re: SEC charges Impact Theory for unregistered offering of NFTs

#29

Post by burnerz27M »

playday wrote: post #25
evilantnie wrote: post #20

Earlier quoted context omitted.

From what I'm reading here, the company misled "investors" by attaching the NFT to ownership in the company, which would be considered a security. "The order finds that Impact Theory encouraged potential investors to view the purchase of a Founder’s Key as an investment into the business, stating that investors would profit from their purchases if Impact Theory was successful in its efforts." When I purchase a baseba…

With baseball cards, You have an expectation that the MLB will continue to promote and develop Baseball as a top sport. You purchased an illegal security.

Wouldn't the inverse be true - baseball cards become much more rare if Baseball itself ceases to exist as a going concern.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#30

Post by yieldcrv »

lukev wrote: post #24
yieldcrv wrote: post #21

Earlier quoted context omitted.

The Federal Trade Commission is fully equipped to handle consumer fraud.

But if it's not a security, is it fraud? If I sell you a hand drawn stick figure for $100, and you buy it because it's "art", then there's no rug to pull. You bought it, and it doesn't matter to the artist whether the resale value goes up or down. If it goes down, it's still not fraud. But if I sell you a hand drawn stick figure for $100, and you buy it with the mutual expectation that it will eventually be worth mor…

that's where we are:

its either go after all collections with this outstanding low hanging and untenable application of Howey, or show the exact distinction that asset creators can follow to act solely as a consumer product like the fine artists and watch collections

it is also accurate that if following a consumer protection framework, most activities and behaviors would not be fraud.

so for a creator or secondary market operator or promoter, not knowing which branch of theory to follow makes all of their behavior bifurcated and prosecutable under one framework, a securities framework, but not a consumer protection framework. and vice versa.

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