SEC Charges Impact Theory with $30 Million Unregistered Offering of NFTs

SEC Charges LA-Based Media and Entertainment Co. Impact Theory for Unregistered Offering of NFTs

The Securities and Exchange Commission today charged Impact Theory, LLC, a media and entertainment company headquartered in Los Angeles, with conducting an unregistered offering of crypto asset securities in the form of purported non-fungible tokens (NFTs). Impact Theory raised approximately $30 million from hundreds of investors, including investors across the United States, through the offering.

According to the SEC’s order, from October to December 2021, Impact Theory offered and sold three tiers of NFTs, known as Founder’s Keys, which Impact Theory called “Legendary,” “Heroic,” and “Relentless.” 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. Among other things, Impact Theory emphasized that it was “trying to build the next Disney,” and, if successful, it would deliver “tremendous value” to Founder’s Key purchasers. The order finds that the NFTs offered and sold to investors were investment contracts and therefore securities. Accordingly, Impact Theory violated the federal securities laws by offering and selling these crypto asset securities to the public in an unregistered offering that was not otherwise exempt from registration.

FTX’s Bankman-Fried appeals jailing as trial nears

Sam Bankman-Fried has appealed a decision to jail him for alleged witness tampering ahead of his Oct. 3 trial over the collapse of his FTX cryptocurrency exchange.

In a filing late on Friday night with the 2nd U.S. Circuit Court of Appeals, Bankman-Fried’s lawyers said the 31-year-old former billionaire simply exercised his First Amendment rights by sharing writings by his former colleague and romantic partner Caroline Ellison with a New York Times reporter.

DOJ Wants to Dismiss FTX Founder’s Expert Witnesses From Testifying

All of FTX founder’s Sam Bankman-Fried’s proposed witnesses should be disqualified from testifying because their disclosure filings are insufficient, their experience may be misleading or their planned testimony may not be relevant, prosecutors said in a late Monday filing.

Bankman-Fried’s team, for their part, wants to exclude a financial analysis expert proposed by the Department of Justice because his proposed testimony may not be allowed under the rules. The filings, part of the so-called Daubert motions due Monday, laid out the two teams’ views on why their opposition should not be able to call certain witnesses to the stand when Bankman-Fried goes on trial for fraud and conspiracy charges in a little over a month.

The DOJ moved to discount all seven of the expert witnesses proposed by Bankman-Fried’s team, saying that some of the disclosures they filed did not detail their opinions, while others “are inappropriate subjects for expert testimony” or possibly confusing for a potential jury.

Are NFTs Securities?

I like to explain crypto initial coin offerings by saying that “they’re like if the Wright Brothers sold air miles to finance inventing the airplane,” so here’s another old-timey analogy for non-fungible token offerings. Imagine that one day in the boom times of the 1920s a young animator named Walter Disney shows up at the stock market looking to raise money for his new company. “I am going to make a fortune making movies and theme parks,” he says, “and I am giving you the opportunity to invest early. I’m not selling you shares of my company, though; I’m selling something even better. Here’s a drawing of a mouse. If you give me $1 million, I will use it to build a movie studio and theme-park empire, and the mouse will feature prominently in that empire, and you will get the royalties from that mouse. Here’s a dog, and a duck, and some nephew ducks. Same deal, though the nephew ducks are cheaper.”

***

You could expand it. “I have drawn 101 Dalmatians,” he might go on. “They all look like, you know, Dalmatians. You can buy any one of them, and get the royalties from that Dalmatian, and use that Dalmatian in any spinoff intellectual property you want. Dalmatian 43 has diamonds on her collar; Dalmatian 81’s ears are in sort of a sassy pose; maybe those Dalmatians are worth more, I dunno, what’ll you pay me for them?”

Bitcoin ETF Deadlines Loom Again for SEC

The journey to a potential Bitcoin ETF has so far been long and arduous. But some key decisions in the race are likely coming this week as crypto faithful await to see how things play out this time.

The US Securities and Exchange Commission is expected to respond to filings from Bitwise, BlackRock, VanEck, WisdomTree and Invesco right before the Labor-Day weekend, according to Bloomberg Intelligence. Regulators can reject, approve or delay. Bitwise’s application is set for consideration by Friday, with the others due the following day, making it likely the SEC will weigh in before the weekend.

Gensler Lags Predecessors in SEC Rulemaking as ESG Plans Linger

The SEC under Chair Gary Gensler is issuing regulations at its slowest pace in decades for a new presidential administration, risking leaving climate disclosure rules and other planned ESG reporting priorities unfinished.

The Securities and Exchange Commission has adopted only 22 rules since Gensler became the agency’s leader in April 2021, according to a Bloomberg Law analysis. The tally was higher at the same point for the first SEC chairs of every administration since at least George W. Bush’s presidency, though Gensler is closing the gap.

Bitcoin trading volume is at its lowest in more than four years

Bitcoin’s trading volume hit its lowest level in almost five years this month as investors keep waiting for reasons to jump back into the market.

An analysis of CryptoQuant data from both spot and derivatives exchanges shows the total volume of bitcoin held on all exchanges fell earlier this month to its lowest level since 2018 and has struggled to rebound.

As of Aug. 26, bitcoin trading volume on all exchanges sat at 129,307 BTC, according to CryptoQuant. Earlier in the month, on Aug. 12, it fell to 112,317 BTC, its lowest level since Nov. 10, 2018. It’s now off the March high of 3.5 million BTC by about 94%.

A Crypto President? Top U.S. 2024 Contenders Aren’t Fans, and Rivals Are Way Behind

Crypto was on fire as a topic in the early U.S. presidential campaigning, but the first Republican debate last week showed it may not be an issue that has legs with candidates trying to grasp mainstream attention.

As the top GOP candidates spun out their well-rehearsed positions – minus former President Donald Trump, who decided not to show up to the first debate’s Milwaukee stage – they avoided mentions of cryptocurrencies or digital-assets regulation, despite its rising status as a priority in Congress and among financial regulators in the U.S. and abroad.

But their silence on stage doesn’t mean they don’t have positions on crypto, as some of them have made abundantly clear. The field of Republican and Democratic hopefuls are all over the map on how the U.S. should handle crypto, from suspicion to enthusiastic embrace.