- The SEC has launched an investigation into Yuga Labs, the creators of Bored Ape Yacht Club, over a possible breach of federal securities laws.
- The investigation of Yuga Labs is part of wider scrutiny of NFT platforms announced in March.
- With Ripple Labs, Coinbase, Kim Kardashian, and Bored Apes coming under the Commission’s radar, the SEC has its teeth deep into Web 3.
The Securities and Exchange Commission (SEC) is looking to increase its attempt at policing the digital asset industry, and this time; the focus is on Non-Fungible Tokens (NFTs).
The SEC is probing the creators of Bored Apes Yacht Club (BAYC) digital collectibles Yuga Labs over claims that some NFTs issued by the company “are more akin to stocks” and whether the sale and distribution of its digital asset ApeCoin are in breach of federal law.
According to a report by Bloomberg, the recent investigation is part of a wider probe into NFTs by the SEC, kicked off in March to determine if digital collectibles can be classified as securities. If NFTs are akin to stocks, they should follow the same disclosure procedures before issuance.
The second arm of the investigation centers around ApeCoin, the Ethereum-based utility token for the Ape network. The SEC is looking at several factors around the asset ranging from its issuance and distribution to its usage. ApeCoin was distributed between the holders of its NFTs, with 62% going to the community and some given to the four founders of BAYC.
Yuga Labs has set its gaze on the positives as it commented on the matter through a spokesperson.
“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.”
The community reacts
The thought of NFTs in the crosshairs of the SEC is distasteful to most users who invest in digital collectibles. NFT enthusiasts have criticized the regulator’s decision all over community spaces, with some describing it as “injustice and against consumer protection.”
Popular tweep @CoinBureau suggested a bigger conspiracy in his comments.
“The fact that the SEC is going after a company that issued monkey NFTs instead of insiders in government and Wall St. gives you everything you need to know.”
With panic creeping into NFT spaces, ApeCoin’s price has plunged over 10%, with many seeking an end to the “excessive interference of the SEC.”