In a surprising twist of events, Impact Theory LLC, a media company headquartered in Los Angeles, found itself facing charges from the United States Securities and Exchange Commission on Monday. The charges involve an unregistered offering of cryptocurrency assets in the form of NFTs.
As per the SEC, Impact Theory agreed to a settlement of approximately $6.1 million for raising money from investors around the globe as well as US investors.
This settlement includes disgorgement, prejudgment interest, and a civil penalty. The company made this settlement without acknowledging or refuting the SEC’s findings to maintain its position in the market.
The SEC has directed the entertainment company to establish a ‘Fair Fund’ with the purpose of refunding the funds that investors who suffered losses paid to acquire the NFTs.
Impact Theory agreed to destroy all Founder’s Keys in its possession or control, publish notice of the order on its websites and social media channels, and eliminate any royalty that Impact Theory might otherwise receive from future secondary market transactions involving the Founder’s Keys.”
The statement highlights that the charges against Impact Theory stem from their alleged illegal raising of nearly $30 million from investors in the US, which violated federal securities laws. This was achieved through unregistered sales of non-fungible tokens (NFTs) during the period from October to December 2021.
It’s worth noting that Impact Theory offered and sold three categories of NFTs, namely the Founder’s Keys collection, which they labeled as “Legendary,” “Heroic,” and “Relentless.”
Regarding the raising of $30 million through a pair of NFT sales, the SEC underscored that Impact Theory drew a comparison between its NFTs and investment in Walt Disney prior to the debut of Mickey Mouse in the 1928 animated short “Steamboat Willie.” They also allegedly expressed intentions of “trying to build the next Disney.”
Antonia Apps, Director of the SEC’s New York Regional Office, pointed out that unless a legitimate exemption applies, any offerings of securities, regardless of their nature, are required to be registered.
She also outlined that, “Without registration, investors of all types are deprived of the protections afforded them by the robust disclosures and other safeguards long provided by our securities laws.”
Also Read: SEC Charges Ex Corrections Department Officer In Crypto Scam
