Report: SEC Probing Bored Ape Creator Yuga Labs Over Alleged Unregistered Offerings
NFTs aren't generally thought of as securities.
Hey Everyone,
While the NFT hype was fun, is the Miami party over yet? If crypto is more regulated, certainly NFTs need to be dealt with.
The SEC has been looking into whether NFTs “are being utilized to raise money like traditional securities” for quite a few months, and the results are obvious. Just like ICOs, this has been a scammy way companies of all varieties have been using crypto hype to their advantage.
Recently it’s getting a bit more serious and specific. The U.S. Securities and Exchange Commission (SEC) is probing Yuga Labs, the creator of the Bored Ape Yacht Club non-fungible token (NFT) collection, on whether sales of its digital assets violate federal law, according to a Bloomberg report.
A16z has pretty much made a huge bet on NFT platforms as a whole. Now it wasn’t so long ago that Yuga Labs Raises $450M Led by A16z. What once seemed so bright now looks like a very sketchy place for VC to attempt to pump value and extract profits.
The SEC is examining whether certain nonfungible tokens from the Miami-based company are more akin to stocks and should follow the same disclosure rules, according to a person familiar with the matter, who asked not to be named because the probe is private.
The SEC is also looking into the distribution of ApeCoin, which went live last March, Bloomberg reported. Not just a bunch of crypto Apes, it turns out.
Yuga Labs, the company behind the popular non-fungible token (NFT) project Bored Ape Yacht Club, has raised a $450 million funding round led by Andreessen Horowitz (a16z). It was once and pretty recently valued at $4 Billion. How NFTs are or aren’t securities isn’t so clear to many and regulators themselves.
When NFTs were being hyped in 2020 and 2021, they were definitely used as cash-cows to raise funds. That was their entire point. Oddly, the probe is looking into whether NFTs (non-fungible tokens) “are being utilized to raise money like traditional securities,” unnamed sources told the news outlet.
An SEC probe may not necessarily lead to action against Yuga. The Miami-based company, which also features CryptoPunks and Meetbits, said it is “committed to fully cooperating with any inquiries” in a statement to Bloomberg. There are many NFT platforms and like some kind of crypto mafia, a16z is in on all the best of them. They even have their own media and PR division. VC’s power has no scruples when GenZ and Millennials are such easy mobs to farm. Share some of that generational money with me, says the fat Silicon Valley tycoon to the debt laden Millennials.
It’s beyond belief. Meanwhile the SEC regulation of crypto sounds like a farce and has been nearly non-existent in recent years and decades.
With backers such as venture capital firm a16z and celebrities like NBA superstar Stephen Curry showing off their Bored Apes online, Yuga may be the highest profile crypto platform yet to be targeted by the Feds. The Feds? Yeah okay.
Despite their perpetually blasé façade, Bored Ape NFTs and their holders must be getting a little frantic. It’s not as if NFT sales haven’t fallen off a cliff this crypto winter, to be expected, the crypto community tells us every 1 in three years! Bitcoin’s price is not optimal, not a hedge against inflation - so different than what we were being told.
Yuga Labs is like a Mafia peddler of NFTs though. Decentralized but consolidating? Yuga developed Bored Apes, which at over 833,000 ETH, has the second most volume all-time among NFT collections, according to CoinMarketCap. Yuga also bought the intellectual property for CryptoPunks, the NFT collection with the highest all-time volume, last March. Oh well, the crypto wealth transfer is like giving money to the rich, stealing from the FOMO suckers.
Supposed Regulatory Crackdown for Crypto?
What crackdown? The news comes as U.S. regulators are making good on their vow to crackdown on the largely unregulated crypto market. Last month, Gary Gensler, the chair of the SEC, suggested that Proof of Stake networks such as post-Merge Ethereum may be required to comply with securities laws that govern the issuance of securities such as stock and bonds.
Nothing much comes of anything regulatory in the U.S., regarding the stock market, capitalism, powerful BigTech or crypto. But punishing China for A.I. Supremacy is fine and dandy.
With Silicon Valley’s elite, Wall Street and Big Banks getting in on the crypto pyramid schemes and trading though, it’s unlikely the U.S. will regulate much of anything at this point. At least in my humble opinion. It’s a wealth transfer mechanism that is working out just fine for the one percent, so why stop now!