- The Bored Ape Yacht Club NFT collection’s creator, Yuga Labs, is being investigated by the U.S. Securities and Exchange Commission to see whether selling its digital assets is against the law.
- The main legal issue at the heart of the investigation is whether NFTs are securities.
The popular Bored Ape Yacht Club collection of NFTs created by Yuga Labs, is now under investigation by the US Securities and Exchange Commission which is looking into whether sales of its digital assets are in violation of the law.
The financial watchdog is reportedly interested in learning whether certain of Yuga’s non-fungible tokens and the cryptocurrency ApeCoin are comparable to equities and should adhere to the same disclosure requirements. Following the SEC investigation news, the native token of Bored Aped Club, ApeCoin, decreased in value by more than a tenth.
According to the report, Yuga Labs has not been charged with any crime, and the SEC has not yet indicated that it will sue due to the investigation’s beginning. MarketWatch’s request for comment from Yuga Labs was not answered. The SEC chose not to respond.
It’s crucial to remember that the Ape Foundation, whose board includes well-known figures like Amy Wu of FTX Ventures and Reddit’s Alexis Ohanian, created ApeCoin (APE), not Yuga Labs.
The NFT collection and ApeCoin are both being thoroughly examined by the SEC. The regulator is looking into potential rules violations related to Yuga Labs’ NFT issuance and launch of its own coin.
It is well known that authorities and lawmakers have wished to understand more about the innovative web3 world. To define and mould the developing ecosystem,” we intend to collaborate with other businesses in the sector and with government authorities”, Yuga said in a statement. “Yuga is dedicated to fully collaborating with any enquiries along the way as a leader in the space,” the statement reads.
Gary Gensler, the chair of the SEC, has long been looking into the cryptocurrency industry to ensure it complies with laws. He occasionally went so far as to say that certain crypto assets resemble securities, which necessitates their registration with the agency prior to token offers.
The SEC’s main complaint against the cryptocurrency industry is related to Ripple’s XRP. The government asserts that XRP sales through unregistered securities transactions enabled Ripple to raise $1.3 billion. Ripple disputes this assertion.
According to a March article by Bloomberg News, the SEC has been looking into the NFT industry as a whole, including the crypto exchanges where they trade. The SEC is looking into so-called fractional NFTs, which involve dividing up the assets into manageable portions for buying and selling, as part of that review.
The SEC is also looking into whether ApeCoin, which was given out to some owners of Bored Ape NFTs in March, qualifies as a security. Holders of ApeCoin have control over a decentralised autonomous organisation, or DAO, another cryptocurrency-native entity.
The NFT market has recently been growing, and Japan recently made public plans to fund activities including NFTs, the metaverse, and Web 3.0 as a whole. According to Fumio Kishida, Japan’s prime minister, the country will achieve its objective by working with the United States and investing in the program’s massive overhaul of the technology industry.