October 17, 2022
By Sharan Kaur Phillora
The U.S. Securities and Exchange Commission is probing Yuga Labs, the creator of the Bored Ape Yacht Club NFT collection, over whether sales of its digital assets violate federal law, according to a report from Bloomberg, citing an unnamed source close to the matter.
Here’s what we know:
On Oct. 11, a report from Bloomberg, citing a source “familiar with the matter,” said the SEC is investigating Yuga Labs over whether certain NFTs are “more akin to stocks” and whether the sales of certain digital assets violate federal laws.
SEC is questioning the categorization of some of Yuga’s NFTs, checking whether they are closer to stocks. If that is the case, those NFTs will be subject to the same disclosure rules as stocks and come under the purview of federal securities laws. These investigations have been going on since March.
But it’s not just Yuga Labs that’s come under the radar, as other NFT creators and crypto exchanges are also being looked at. The SEC is reportedly also investigating how ApeCoins were handed to the holders of Bored Ape Yacht Club (BAYC), Bored Ape Kennel Club, and Mutant Ape Yacht Club. The ApeCoin community received 62% of the fixed one billion ApeCoin supply, including 15% airdropped to current NFT holders.
Following the publication of Bloomberg’s report, ApeCoin saw a crash of almost 8 percent in value and has yet to recover from it.
“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,” a Yuga spokesperson said, confirming that the company is cooperating with the SEC’s probe.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.