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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

#241

Post by jncfhnb »

mattdesl wrote: post #227
jncfhnb wrote: post #90

Earlier quoted context omitted.

You ever go buy a shirt and have the counter guy ask you if you’d like to register the shirt in a marketplace? I don’t want to think of my shirt as a sellable asset.

Gamers spend millions on registering assets in marketplaces: game skins, mods, extensions, assets, it is all just buying records of ownership, but in a centralized company-owned database rather than distributed ledger.

That’s not the point.

People do not want to think of the things they buy as sellable assets. It’s just a shirt. Just let me buy it. I give zero fucks about your choice of backend data storage.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#242

Post by IanCal »

throwaway2037 wrote: post #198
IanCal wrote: post #116

Earlier quoted context omitted.

> The Securities Act of 1934 has a "duck test" definition of security - if it is marketed, bought, sold, and held as a money-making thing, it's a security That doesn't seem right. You're missing a really fundamental part of what makes a security a security. Let's steal the cut phrase from investopedia > an investment contract, for the purposes of the Securities Act means a contract, transaction or scheme whereby a pe…

This posts reads like you don't understand the Howie Test. Literally, that decision blew away any offering designed to evade SEC rules. The Test is incredibly general and has never been defeated. Why do you think this time is different?

I don't think it's different. NFTs are not all securities, right? Just because people speculate with them doesn't make them securities just like baseball cards aren't securities. NFTs can be securities, the ones the article is about clearly are.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#243

Post by yieldcrv »

potatototoo99 wrote: post #92
yieldcrv wrote: post #79

Earlier quoted context omitted.

Its also worth nothing that the SEC is losing in court, losing the support of Congress and losing the support of the White House specifically as more people, including judges, notice this lack of distinction and the SEC’s unwillingness (and inability) to describe why there is a distinction there is either a way to issue crypto collections and collect money for them without being a security, or all other collections s…

That's not true, just wishful thinking on your part. Not all collectibles are unregistered offerings, obviously. Being a collectible also doesn't mean it can't be an unregistered offering also. This one clearly was.

SEC just lost again on another arbitrary and capricious stance in the crypto asset space!

https://www.bloomberg.com/news/articles/2023-08-29/us-court-...

Re: SEC charges Impact Theory for unregistered offering of NFTs

#244

Post by joshuamorton »

EGreg wrote: post #232
joshuamorton wrote: post #229

Earlier quoted context omitted.

But this is where judges come in, who can analyze things like real world intent. And stuff like "At launch, LBRY retained 400 million LBC for its own use" doesn't to me imply that these things are the same. TCGs do not function like securities. If I am a securities issuer, I make money primarily when the security goes up in value. If I am a TCG producer, I make money when people buy more of the product, irrespective…

Can you provide any link at all which defines “common enterprise” in some authoritative way? Otherwise it is just a bunch of words. https://blj.ucdavis.edu/archives/vol-5-no-2/why-the-common-e... Gensler said Bitcoin is not a security because there is no common enterprise. But no one ever explains what it means. Vertical? Horizontal?

That article seems fairly authoritative, and lbry would fail the horizonal and narrow vertical tests at least, and tcgs would pass them.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#245

Post by mattdesl »

jncfhnb wrote: post #241
mattdesl wrote: post #227

Earlier quoted context omitted.

Gamers spend millions on registering assets in marketplaces: game skins, mods, extensions, assets, it is all just buying records of ownership, but in a centralized company-owned database rather than distributed ledger.

That’s not the point. People do not want to think of the things they buy as sellable assets. It’s just a shirt. Just let me buy it. I give zero fucks about your choice of backend data storage.

I see—you are saying gamers don’t really care about whether an asset is sellable; but the same is true of most things we purchase. When we buy a book or a vinyl record, we don’t think about its market value, until the day we stop needing/wanting it and realize selling could provide us some return. In those moments, it’s nice that there is no company that can block you from selling on the open market. Many gamers would appreciate this (and do, when they are given the ability to refund digital purchases they no longer want/use).

Re: SEC charges Impact Theory for unregistered offering of NFTs

#247

Post by bonestamp2 »

lukev wrote: post #26
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.

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

I don't think NFTs as a whole are breaking any FTC related laws. However, the way that they are marketed or sold could break some laws if the communications are deceptive. For example, a rug pull might be considered illegal under US Law Title 16, Chapter 1, Subchapter B, Part 238.4 "Switch after Sale":

https://www.ecfr.gov/current/title-16/chapter-I/subchapter-B...

Re: SEC charges Impact Theory for unregistered offering of NFTs

#248

Post by EGreg »

ameister14 wrote: post #236
EGreg wrote: post #197

Earlier quoted context omitted.

If not for the show, the cards wouldn’t be worth as much. The show is what is spreading the memes and driving the demand for show related merchandise. That IS the business model! It sounds like your whole defense would hinge on hoping the SEC won’t be able to convince a court that it’s a common enterprise. I looked it up and “common enterprise” is not very well defined in either statutory law nor case law. I have bee…

So it's clearly not horizontal, right, and your argument is that there is a vertical common enterprise? I don't think it's all that poorly defined, but either way, for a vertical the 11th circuit required that you must "show that the investors are dependent upon the expertise or efforts of the investment promoter for their returns." That's just not the case here. The show could end completely and "investors" (I don't…

Just because a show could hypothetically end and the assets would go up, may not be a convincing argument. Hypotheticals could go either way.

One company owns the IP, the rights to the characters, to produce shows, they have the expertise, and it is exactly the show and the brand that drives the demand for merchandise sales. This is well established. They advertise the merchandise.

Now, without the advertisement, there could remain a niche group of people who would pay a lot for collectibles, but nowhere near the amount of people or capital under their management than during the heyday of the show actually airing and constantly making the memes (pokemon, yu gi oh, whatever) relevant and driving demand.

By your argument, LBRY the company could fold and people would continue to use LBRY tokens. Which is exactly what happened. So does that mean it wasn’t securities sales after all?

As for the other issues you mentioned, the court explicitly stated that just because some people buy the cards for consumptive use doesn’t mean they all do. You could buy 100 tickets to a ball game, but intend to only take your family, and scalp the rest. One of the criteria for a securities sale is did you buy more than you could ever conceivably use? And if you keep the cards in mint condition unopened that’s pretty much textbook definition of investing into collectables. Then the only question us how much are you relying on the expertise of the company producing Yu Gi Oh content to… continue to produce Yu Gi Oh and keep it relevant.

Now, if Yu Gi Oh was in the public domain and lots of entities could keep the memes going, sure. It would be super decentralized (although a strict reading by the SEC could nevertheless see a “common enterprise” horizontally across all of them, much as they are considering now for Ethereum!)

But since all these initiatives (Teenage Mutant Ninja Turtles, the music and movie industries etc.) work off massively relying on copyright protections, so they are the ONLY ones authorized to use / license the characters, then yeah you’re kind of relying on the efforts of a third party promoter to make sure a lot of people give a crap about your mint condition charazard collectibles!

Do the following thought experiment … if some group were selling the same exact type of trading cards in the form of NFTs, and creating Telegram channels to promote them, creating all kinds of episodes featuring those characters, are they a “common enterprise”?

Re: SEC charges Impact Theory for unregistered offering of NFTs

#249

Post by Dylan16807 »

mrkeen wrote: post #230
Dylan16807 wrote: post #206

Earlier quoted context omitted.

Lots of things try to "evade" SEC rules by making them not apply, and many are successful. What does "never been defeated" mean, exactly?

> What does "never been defeated" mean, exactly? Universal statements like this are hard to prove, and easy to disprove. All you need to do is provide one of your many successful examples.

I need clarification on what that sentence means before I can even look for a good example! Otherwise I'll just point at something that decided to not be a security and never had enforcement. There's a million kinds of collectible that fit that category.

If it means that when the SEC invokes the rule it has never failed, then that probably just means they're going after the strongest cases. It doesn't mean you can't "evade" it.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#250

Post by jncfhnb »

mattdesl wrote: post #245
jncfhnb wrote: post #241

Earlier quoted context omitted.

That’s not the point. People do not want to think of the things they buy as sellable assets. It’s just a shirt. Just let me buy it. I give zero fucks about your choice of backend data storage.

I see—you are saying gamers don’t really care about whether an asset is sellable; but the same is true of most things we purchase. When we buy a book or a vinyl record, we don’t think about its market value, until the day we stop needing/wanting it and realize selling could provide us some return. In those moments, it’s nice that there is no company that can block you from selling on the open market. Many gamers woul…

No, you don’t see. People don’t want their stuff to be sellable.
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