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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

#121

Post by duskwuff »

nradov wrote: post #56
ramijames wrote: post #31

Earlier quoted context omitted.

That's exactly what we've been trying to build at Ultra.io The push back from gamers has been non-stop and intense. I don't get it. They are willing to buy digital assets which can't be resold on an open market. They are not willing to buy digital assets that can. It's kind of bonkers.

There is push back because it's not a viable business plan and will never work with the most popular games. Games are controlled by publishers. They want to completely own the market for skins and other virtual assets. Why would they ever share their revenue with you guys? What's in it for them? If you want to succeed with this scheme then ultimately you need to produce your own games. And those will have to be games…

> They want to completely own the market for skins and other virtual assets. Why would they ever share their revenue with you guys?

Or, even worse: why would a game publisher share some of the revenue for in-game purchases with customers who have lost interest in the game and are selling off their items?

Re: SEC charges Impact Theory for unregistered offering of NFTs

#122

Post by duskwuff »

delecti wrote: post #102
playday wrote: post #35

When you buy a restaurant lunch, you are expecting to increase your work income via the efforts of the cooks. And you clearly invested money since you pay for the lunch before you ate it. That’s all 3 prongs if the Howey test. Why isn’t the SEC enforcing securities laws against lunch fraud? Lunches must publish their financial statements so lunch buyers can make informed decisions! Personally I am angry that restaura…

Even under your ludicrous example, lunch is not an investment because the increase in income does not come from reselling the lunch. At the absolute most, if you really squint and stretch, you could argue that lunch is a business expense.

Or, to put it in terms of the Howey test: eating lunch is not a common enterprise, and not dying of hunger is not an expectation of profit.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#123

Post by IanCal »

ok123456 wrote: post #105
bonestamp2 wrote: post #12

Earlier quoted context omitted.

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

How do NFTs fail to meet the Howey Test?

Easy.

Let's start by looking at what typical tokens are.

A fungible token is simply a store of the following records:

(public key, amount)

There is a stored procedure that lets anyone with the private key to lower the "amount" value on their row and increase the "amount" value on another row by the same amount. There's no tracking of which part of the amount came from where, the "tokens" are fungible.

Now let's look at what a non-fungible token is.

It's a store of the following records:

(public key, id)

Whoever has the private key can change the public key field in the record.

That's... it.

You can add a table that has

(id, metadata, url), that's common and what you see with most shown NFTs. There's some helper functions but really that's the essence of it.

None of that necessitates it being sold as an investment in a common enterprise any more than selling bits of paper with a number and a signature on them does. Signed prints by an artist aren't securities, your place in the line in a queue isn't a security, a concert ticket isn't a security.

You can obviously however treat the above data structure as representing some kind of security. This is true with fungible tokens too, a list of shareholders is essentially the same structure. So it comes down to how it's sold.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#124

Post by AnthonyMouse »

capableweb wrote: post #109
carabiner wrote: post #101

NFT was just all fake volume... Sell an NFT to yourself for $1m, boom, you now own a $1m asset. Then list it for $100k for the next sucker.

How do you sell yourself a NFT to yourself if you don't already have $1,000,000? Something is clearly missing from your line of thinking here.

> How do you sell yourself a NFT to yourself if you don't already have $1,000,000?

Installment plan.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#125

Post by IanCal »

capableweb wrote: post #109
carabiner wrote: post #101

NFT was just all fake volume... Sell an NFT to yourself for $1m, boom, you now own a $1m asset. Then list it for $100k for the next sucker.

How do you sell yourself a NFT to yourself if you don't already have $1,000,000? Something is clearly missing from your line of thinking here.

Many people with a million dollars would like to have a million dollars and another hundred thousand dollars.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#126

Post by vagab0nd »

capableweb wrote: post #109
carabiner wrote: post #101

NFT was just all fake volume... Sell an NFT to yourself for $1m, boom, you now own a $1m asset. Then list it for $100k for the next sucker.

How do you sell yourself a NFT to yourself if you don't already have $1,000,000? Something is clearly missing from your line of thinking here.

You use a flashloan.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#127

Post by throwitaway156 »

carabiner wrote: post #101

NFT was just all fake volume... Sell an NFT to yourself for $1m, boom, you now own a $1m asset. Then list it for $100k for the next sucker.

This is how the free market works, however. You can sell yourself a pencil for 1mil and it will be technically valued at 1mil in the public market, but good luck selling that to someone else. Same applies to NFTs, just a bit more marketing (edit: and dumb hype i should add) is involved.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#128

Post by psychlops »

Animats wrote: post #107

NFTs were supposed to be an end-run around the Howey Test. ICOs were clearly securities offerings, and the SEC shut down most of those. NFTs were specifically designed to evade that test, by claiming they were really "digital artworks". This one, though, was clearly marketed as Make Money Fast. The Securities Act of 1934 has a "duck test" definition of security - if it is marketed, bought, sold, and held as a money-m…

> if it is marketed, bought, sold, and held as a money-making thing, it's a security.

At face value that definition would, of course, include commodities and futures, which it doesn't. There must be more to the definition.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#129

Post by furyofantares »

capableweb wrote: post #109
carabiner wrote: post #101

NFT was just all fake volume... Sell an NFT to yourself for $1m, boom, you now own a $1m asset. Then list it for $100k for the next sucker.

How do you sell yourself a NFT to yourself if you don't already have $1,000,000? Something is clearly missing from your line of thinking here.

Some people do have a million dollars.
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