SEC v. Impact Theory

The SEC charged Impact Theory, LLC, a Los Angeles-based media and entertainment company, for conducting an unregistered offering of crypto asset securities in the form of non-fungible tokens (NFTs) called Founder’s Keys, raising approximately $30 million from hundreds of investors, including U.S. investors, between October and December 2021. The NFTs, offered in three tiers (Legendary, Heroic, Relentless), were marketed as investments tied to the company’s success, with promises of “tremendous value” if Impact Theory achieved its goal of becoming “the next Disney.” The SEC determined the NFTs were investment contracts and thus securities, violating registration provisions of the Securities Act of 1933. Impact Theory settled, agreeing to pay over $6.1 million, destroy all Founder’s Keys in its possession, eliminate royalties from secondary market transactions, and establish a Fair Fund for investors.