The United States Securities and Exchange Commission (SEC) is reportedly probing into the creators of Bored Ape Yacht Club (BAYC), Yuga Labs, over whether the BAYC Ethereum NFTs and the ApeCoin token are unregistered securities according to Bloomberg.
Bloomberg’s report cites an unnamed source that claims the SEC is exploring whether Yuga Labs broke federal law by issuing NFTs that act similar to stocks and is investigating the distribution of the Ethereum-based ApeCoin tokens earlier in the year. Per the report, the firm has not yet been accused of any wrongdoing and the investigation may not necessarily lead to charges being filed. The SEC has reportedly been investigating the matter since March.
The report further states that the SEC is looking into how ApeCoins, the Ethereum-based governance and utility tokens used within the APE ecosystem, were distributed to members of the Bored Ape Yacht Club, Mutant Ape Yacht Club, and Bored Ape Kennel Club.
Yuga Labs confirmed that they are cooperating with the inquiries from the SEC saying in a statement to Bloomberg:
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.
BAYC is considered one of the most successful NFT projects to date. The main collection of 10,000 NFTs sold at $190 ETH apiece and the sale yielded Yuga around $1.9 million. The firm proceeded to launch spin-off projects, including the Mutant Ape Yacht Club and Otherside metaverse game. In secondary trading volume, BAYC also generated around $2.5 billion according to data from CryptoSlam. BAYC owners are entitled to many benefits, including access to a private community and the ability to use their NFTs to create and sell derivate artworks and projects. The project garnered massive popularity and has attracted a number of celebrity owners including Eminem, Jimmy Fallon, and Madonna.
The inquiry into Yuga Labs is the latest in the SEC’s relentless pursuit of the crypto sphere. The SEC, under the leadership of the chair Gary Gensler, who stepped into the position in April 2021, shares the view that almost every cryptocurrency, apart from Bitcoin could be regarded as a security. This view has promoted the agency to pursue a number of recent actions including accusing Coinbase of listing nine tokens as securities. The SEC also recently fined reality TV star Kim Kardashian for Touting EthereumMax on Instagram. The agency is currently embroiled in a case against Ripple Labs in which it recently lost an appeal and was ordered to hand over key documents.
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