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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

#211

Post by Dylan16807 »

sroussey wrote: post #144
dumbfounder wrote: post #118

Earlier quoted context omitted.

Care to offer some evidence of that? I haven't heard that and I am in the vertical. I agree that Impact Theory was selling securities, and I think it's pretty clear. But bored apes a security? I don't think many share that opinion. How is it any different than art or pokemon cards? People buy both all the time with the expectation they go up in price.

Do the Pokémon card makers make money continuously as the cards change hands?

If the buyer's expectation of profit from the common enterprise pushes something closer to being a security, wouldn't that kind of money extraction move it further from being a security?

Re: SEC charges Impact Theory for unregistered offering of NFTs

#212

Post by Dylan16807 »

pclmulqdq wrote: post #207
Dylan16807 wrote: post #202

Earlier quoted context omitted.

The orange trees are there for the purpose of producing and selling oranges. In the case of a plain NFT, all labor associated with a piece of art is done before the NFT is sold. There is no enterprise generating profit for the owner. It's just an asset where they hope the value will increase.

Sure it is. And all that language about how you are buying into a project or this will be part of a future game with an economy is all part of that art too, right? And all the promises of airdrops are part of the art done beforehand, as are all of the promises that early buyers will be the "1%" of the new ecosystem?

I would say that a plain NFT doesn't have a game or airdrops.

Impact Theory is not a plain NFT.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#213

Post by bboygravity »

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…

Yeah, well the SEC also has rules from the 1930's stating that brokers who sell shares to clients and fail to deliver them should have their license suspended.

Guess how often that rule was applied since the 30's?

Zero. And that's not because fails to deliver don't exist.

So yeah, there's a massive regulatory crisis going on and SEC rules are applied however the future employers of the SEC decisionmakers want.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#214

Post by J_Shelby_J »

starttoaster wrote: post #93
gmerc wrote: post #46

Earlier quoted context omitted.

It’s a completely made up problem for which crypto is supposedly the solution - We’ve known for 2 decades how to do skin or items exchange between games. It involves relational databases. Valve does it for their games or at least could do it at will. There’s not one unsolved technical problem here - There is zero incentive for developers, publishers and licensors (you know the people that make up the game industry) t…

I'm not even a crypto bro, but it's honestly more exhausting to listen to someone go on about how private backends with user facing storefronts and relational databases solve the same problems as blockchain, than it is to listen to a crypto bro explain why we can't trust companies to manage records in their own relational database.

Amen. The anti-crypto crowd in 2023 are now the more belligerent of the two (since the crypto crowd have largely gone quiet.)

You can ideologically disagree with it's use a money and I could understand that, but decentralized databases could be used nicely to circumvent the steam store 5% marketplace fees. That's value removed consumers wallet and sent to Bellevue at 99.9999% profit.

It's not a technical problem at this point with the low fee + fast transactions + negative carbon DeDBs out there. It's an incentive problem - no game studio wants to give up their cash cow, and consumers are, rightfully, wary of web3. IMO, it's going to be a long climb back for what we now call 'blockchain', but in 5 or 10 years I believe there will be advocacy for SOME data to be (including digital collectibles) free and open. Ironically, I think AI will speed this up as the major platforms throw up higher and higher walls to keep AI out -- people will realize the only options for control of their public facing works is to self host or use some form of decentralized database. That or we all start using github for social media.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#215

Post by pclmulqdq »

Dylan16807 wrote: post #212
pclmulqdq wrote: post #207

Earlier quoted context omitted.

Sure it is. And all that language about how you are buying into a project or this will be part of a future game with an economy is all part of that art too, right? And all the promises of airdrops are part of the art done beforehand, as are all of the promises that early buyers will be the "1%" of the new ecosystem?

I would say that a plain NFT doesn't have a game or airdrops. Impact Theory is not a plain NFT.

I would agree with you that an NFT in itself does not constitute a security. An NFT as it was actually used by crypto people is a different story, though. And I would say that the "NFT as a pre-investment in a project" is the norm, not the exception in that regard.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#216

Post by somenameforme »

RC_ITR wrote: post #70
somenameforme wrote: post #61

Earlier quoted context omitted.

It depends on exactly how the system is decentralized, but let's imagine that the tokens contain sufficient information to generate the e.g. skins. And now imagine some company decides to stop supporting this group of tokens, or perhaps goes bankrupt. In a centralized system that's the end, but in a decentralized one another company is now free to take advantage of that gap in the market and offer to support those to…

> In a centralized system that's the end, but in a decentralized one another company is now free to take advantage of that gap in the market and offer to support those tokens. You’re saying the new company makes a new game to support the skins? Other than “making those skins be worth money,” why do we need to spend so much effort on proof of ownership then? Couldn’t the new developer just make those skins available f…

People like to own things. It's the entire point of tokens. They enable one (in the optimal scenario, which exists for some but not all tokens) to own digital things in the same way you might own a hammer. You can transfer it, sell it, use it as your company logo or whatever else you want. And all of those rights are transferred alongside the token.

In this case a new company could support those tokens, but not without the owner's permission. So they could not make the skins available for free, even if they wanted to. It's kind of akin to how when you post on this site, what you post is actually legally copyrighted by you. The reason HN is able to publish it is because in the terms you agreed to, there is a clause where you license your text to them for display, and much more. But you could sue HNClone.com for copyright infringement if they chose to publish your text, without your (or YCombinator's - due to the extremely permissive license we grant them) permission.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#217

Post by bl4ckneon »

mherdeg wrote: post #195

I hate to dunk on this type of art while it's down but > Impact Theory agreed to destroy all Founder’s Keys in its possession or control What does this mean practically -- like they delete the files that would allow them to transfer control of the NFT? What even are these things, are they just text files in a distributed file system that list the owner's name or what?

They would most likely "burn" them which means giving control, transferring ownership, of those NFTs to a wallet address that no one controls which means they are out of circulation.

I assume they see using a standard NFT contract which doesn't have any way of taking control of those NFTs once ownership is to that burner address. It would be impossible.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#218

Post by junofan »

Animats wrote: post #194
dcow wrote: post #182

Earlier quoted context omitted.

I have very little skin in the game and certainly haven't dabbled in the NFT world. And I “don’t like” the idea that a regulator can essentially leverage ambiguous language to prosecute after the fact just to leave innovators on their toes. This is required to achieve your goal of innovators asking “should I be doing this”, because otherwise there are clear guidelines and nobody is left wondering. Nothing has changed…

> But would it really have hurt to have the SEC say “we’ll be applying the Howey Test to NFTs, if you plan to sell one we’d recommend consulting a lawyer versed in securities law before proceeding”. They did that a few years back for ICOs, sending out "You seem to be doing an ICO. Tell us why you don't need to register this as a security". The ICO market mostly evaporated. A few ICOs did a securities registration. Em…

Got a link to the registration form? Would like to learn more.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#219

Post by gmerc »

J_Shelby_J wrote: post #214
starttoaster wrote: post #93

Earlier quoted context omitted.

I'm not even a crypto bro, but it's honestly more exhausting to listen to someone go on about how private backends with user facing storefronts and relational databases solve the same problems as blockchain, than it is to listen to a crypto bro explain why we can't trust companies to manage records in their own relational database.

Amen. The anti-crypto crowd in 2023 are now the more belligerent of the two (since the crypto crowd have largely gone quiet.) You can ideologically disagree with it's use a money and I could understand that, but decentralized databases could be used nicely to circumvent the steam store 5% marketplace fees. That's value removed consumers wallet and sent to Bellevue at 99.9999% profit. It's not a technical problem at t…

That’s exactly what I am saying. It’s not a technical problem, it’s an incentive problem and the entire industry has no incentive to adopt a the technical solution these people are parroting to investors.

Re: SEC charges Impact Theory for unregistered offering of NFTs

#220

Post by kemitchell »

mike_d wrote: post #159
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…

> NFTs were specifically designed No, NFTs were to capitalize on the new tax reporting and valuation requirements for physical art that closed the money laundering loophole.

Interested. Source to read?

Thank you.

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