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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

#131

Post by fulladder »

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…

> since you pay for the lunch before you ate it

Is this a post-pandemic thing? Like so many people are just walking out without paying the bill these days that they have to charge the card before you eat? This sounds like something that may be happening in SF, and maybe it will catch on in other places eventually, but right now it's not the norm anywhere I've been.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#132

Post by djur »

scyclow wrote: post #38
RC_ITR wrote: post #18

Earlier quoted context omitted.

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?

I guess there are a few concerns here. What if the game developer goes out of business, or dies, or accidentally drops their db? What happens if they decide they don't like one of their collectors and want to wipe their balance clean? (Of course, you could do this with NFTs as well, but you'd have to write it into the contract ahead of time). On top of that, the developer would need to build and operate their own inf…

You can address all of those issues regarding continuity equally as well with actual legal contracts as you can with crypto 'smart' contracts (and you need the legal contracts in either case).

Re: SEC charges Impact Theory for unregistered offering of NFTs

#133

Post by TylerE »

dcolkitt wrote: post #119
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…

> When I purchase a baseball card, I do not have the expectation that there is any additional value attached to the baseball card beyond what the collector's market will pay. What about music royalties rights? Those are almost always purchased with expectation of profit. Those are even explicitly marketed on the basis of how big an artist is going to be. Yet the SEC does not consider them securities https://www.sec.g…

That’s IP law, not investment.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#134

Post by not2b »

throwitaway156 wrote: post #127
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.

No, because your $1 million pencil was never on the market; your hypothetical self-sale was a fake transaction. With NFTs it was often deceptively represented that someone paid $1 million, disguising the fact that these were bogus self-sales.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#135

Post by TylerE »

acdha wrote: post #69
edent wrote: post #47

Earlier quoted context omitted.

Because there's no guarantee that those assets will be respected. At any point the game maker can say "V1 assets aren't supported in V2". Or they can flood the market with "rare" items. Or they'll buy an item which was "stolen" and have it unilaterally revoked. Or... the list goes on. There's also zero possibility of cross-game use. If ID releases the BFG9000 for free, is Skyrim going to let you shoot that at dragons…

Just to expand on your last point, I read their ad copy and once you strip out all of the meaningless filler text you have this key quote: “with the permission of the developer”. If they weren’t going to do it before, this can’t force them and if they were, they don’t need it. As a game buyer, that sounds like doubling the number of companies who need to be paid and whose business decisions or failure will break thin…

Total rent seeking.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#136

Post by ivalm »

psychlops wrote: post #128
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.

OP is missing “common enterprise” part of definition, which covers commodities. Security futures are securities (jointly managed by SEC and CFTC), commodity futures are not (as they are a derivative on a non-security). The main inconsistency is that bank loans are not securities.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#137

Post by kevingadd »

ramijames wrote: post #31
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…

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.

I spend plenty of money in games on stuff like DLC or skins or unlockable characters and the idea of reselling them on an "open market" or having their price be subject to the whims of the market is thoroughly unappealing. If I want to make a profit why would I do that in the wild west with video game skins instead of real regulated markets where I'm far less likely to get scammed? I buy skins or spend money to unlock characters because I like them and want to use them.

Furthermore skin resale markets and skin gambling (the two tend to be connected) mean we're roping young gamers into gambling and gambling-adjacent stuff at a young age before their brains are mature enough to handle it. It's disgusting.

As a game developer, also, it just doesn't make sense. Giving skins resale value means that now I can never revise them or patch them out of the game, no matter the reason. Even worse, it cuts the value of each skin I sell because now a player who quits can unload all their skins first which means I earn less revenue off new players.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#138

Post by threeseed »

duskwuff wrote: post #121
nradov wrote: post #56

Earlier quoted context omitted.

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?

Or, even worse: why would a game publisher share some of the revenue for in-game purchases with customers who have no interest in the game and are simply trying to profit off the customers who do?

Re: SEC charges Impact Theory for unregistered offering of NFTs

#139

Post by threeseed »

mattdesl wrote: post #80
gmerc wrote: post #78

Earlier quoted context omitted.

You mean “There is lots of reasons why this would be interesting to game developers”, goes on not mentioning a single one ?

Why do I even bother to reiterate the rest of the paragraph that you did not quote? Game developers and their users are regularly exploited by App Store and payment processor fees. Transfers of ERC721 and ERC20 on an L2 is negligible by comparison: https://l2fees.info/

Apple, Google etc aren't going to allow you to bypass their in-app purchasing system.

Has been tried many times before and just results in your app being banned.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#140

Post by echelon »

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…

> This one, though, was clearly marketed as Make Money Fast.

How about BAYC?

All the a16z investments in crypto?

Will the hammer fall for these, too?

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