SEC accuses ImLianGuaict Theory of issuing unregistered securities in the form of NFTs.
SEC accuses ImLianGuaict Theory of unregistered NFT securities issuance.
Author: Katherine Ross, Blockworks; Translation: Song Xue, LianGuai
The U.S. Securities and Exchange Commission (SEC) has charged the Los Angeles media and entertainment company ImLianGuaict Theory with “unregistered issuance of securities in the form of encrypted assets.”
The SEC claims that the NFTs launched by ImLianGuaict Theory in the fall of 2021 constitute investment contracts because the company “encourages potential investors” to view Founder’s Keys NFTs as investments in its business.
ImLianGuaict sold three levels of NFTs, called Legendary, Heroic, and Ruthless. It raised approximately $30 million in this offering.
The SEC said that the company “emphasized that it was ‘working hard to build the next Disney’ and that if successful, it would bring ‘enormous value’ to the primary buyers of the Founder’s Keys.”
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The SEC stated that ImLianGuaict Theory plans to use NFT proceeds for “development,” “bringing in more teams,” and “creating more projects.”
The SEC said: “Given these statements, many potential and actual buyers of KeyNFTs have indicated that they view KeyNFTs as investments in the company and understand ImLianGuaict Theory’s statements in this way: over time, the company’s development of its projects will increase the value of KeyNFTs.”
ImLianGuaict Theory has agreed to settle the lawsuit and will pay approximately $6.1 million in “disgorgement, prejudgment interest, and civil penalties.”
In addition, ImLianGuaict Theory will establish a “fair fund” to return funds to “harmed investors.” All Founder’s Keys currently held by the company will be destroyed.
“Without a valid exemption, any form of securities offering must be registered,” said Antonia Apps, Regional Director of the SEC’s New York office. “Without a valid exemption, any form of securities offering must be registered,” said Antonia Apps, Regional Director of the SEC’s New York office.