With its investigation against BAYC creator Yuga Labs, the SEC has made its intentions clear that NFTs, too, are within its radar.
The SEC is scrutinizing Yuga Labs to study if its NFT collections are actually securities.
Other than the Yuga Labs’ popular NFT collection, Bored Ape Yacht Club, the SEC is also looking into its Apecoin token distribution.
In a move that may ring warning bells among NFT enthusiasts, the U.S. Securities and Exchange Commission (SEC) is investigating Yuga Labs for its collection of Bored Ape Yacht Club (BAYC) non-fungible tokens (NFTs) and the ApeCoin (APE) cryptocurrency.
If we go by the Bloomberg report, an anonymous source claimed that the SEC believes that Yuga’s labs’ NFT tokens are unregistered securities.
Speaking of the Yuga Labs’ Bored Ape Yacht Club (BAYC) NFT collection, it is among the most popular NFT collections today. Launched in 2021, it had an original minting price of 0.08 ETH and has reached a floor price of 75.6 ETH today.
On the other hand, ApeCoin (APE) is a community-driven, utility-based token for the BAYC community, which is issued by the ApeCoin DAO and the Ape Foundation. Built on top of Ethereum, APE is a governance token released earlier this year to be used within the APE ecosystem.
The token was distributed to the holders of Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), and Bored Ape Kennel Club members.
62% of the APE Coin’s one billion fixed supply was allocated to the ApeCoin community, while 5% was airdropped to existing NFT holders. Additional percentages of tokens were allocated to Yuga Labs and the four founders of BAYC.
Relevant Article: Kim Kardashian Slapped by the SEC With Over a $1M Penalty for an Unlawful Crypto Promotion
The SEC is specifically reviewing whether some of Yuga Labs’ NFTs are more similar to stocks and should be subject to the same disclosure rules. On top of that, it is further examining the distribution of ApeCoin to the NFT holders at no cost.
No, this is not the first time the NFT segment has come under the SEC’s radar. Reportedly, the SEC has been investigating NFT creators and collections since March to determine whether the NFTs exhibit the properties of securities.
So, Yuga Labs is just one of several companies being investigated by the SEC as it analyzes the broader NFT market. As such, we may see the SEC taking action against even more NFT creators in the coming days.
Thus, quite naturally, there is fear among industry players that the SEC’s probe of Bored Ape will not only cement the definition of NFTs as financial securities but also signals how the SEC will approach well-known tokens explicitly tied to such collections, like ApeCoin.
Relevant Article: Kim Kardashian Slapped by the SEC With Over a $1M Penalty for an Unlawful Crypto Promotion
“It’s well-known that policymakers and regulators have sought to learn more about the novel world of Web3. We hope to partner with the rest of the industry and regulators to define and shape the burgeoning ecosystem. As a leader in the space, Yuga is committed to fully cooperating with any inquiries along the way,” said a spokesperson for Yuga Labs, confirming that it was cooperating with the SEC’s probe into the matter.
______________________
VASPs need a Travel Rule Solution to begin complying with the FATF Travel Rule. So, have you zeroed in on it yet? We have the best solution to suggest: Veriscope! Veriscope is the only frictionless Crypto Travel Rule compliance solution.
Visit our website to read more: https://www.shyft.network/veriscope and contact our team for a discussion: https://www.shyft.network/contact
Also, follow us on Twitter, LinkedIn, Discord, Telegram, and Medium for up-to-date news from the world of crypto regulations.
.png)
