August 2023 – FinTech and Blockchain Law Watch

An SEC First: NFTs are Sold as Securities

Aug 29 2023

By Drew Hinkes, Eden Rohrer, and Josh Durham

On 28 August 2023, in its first enforcement action for securities registration violations brought against an issuer of NFTs, the SEC settled with media and entertainment company, Impact Theory, LLC (Impact).

The settlement order included findings that from 13 October 2021 to 6 December 2021, Impact sold non-fungible tokens called Founder’s Keys (KeyNFTs) raising approximately US$30 million. Broadly interpreting Howey, the SEC found that the NFTs were sold in investment contracts, based on the company’s public statements about the expected rise in value of the NFTs and its use of profits from sales to develop the company.

First SEC Enforcement Action Arising Out of the New Marketing Rule Targets FinTech Investment Advisor Titan Global Management

Aug 25 2023

By Judie Rinearson, Richard Kerr, and Josh Durham

Effective in 2022, the SEC adopted a new Marketing Rule for investment advisers to modernize the regulation of investment adviser advertising and solicitation practices. The adoption of the new Marketing Rule was the first substantive amendment to Rule 206(4)-1 under the Investment Advisers Act of 1940 since its adoption in 1961. A discussion of the impact of the new Marketing Rule can be found here.

Archive:August 2023