SEC Charges Impact Theory with Unregistered Offering and Sale of Crypto Securities

News | August 29, 2023 By:

On Monday, August 28, 2023, the Securities and Exchange Commission (SEC) charged Los Angeles-based entertainment company Impact Theory with violating federal securities laws in connection with its unregistered offering and sale of cryptocurrency securities called “Founder’s Keys” (KeyNFTs).

According to the SEC order, between October and December 2021, Impact Theory raised nearly $30 million worth of ether by selling KeyNFTs to hundreds of investors without registering the offering. The SEC alleges that Impact Theory marketed the KeyNFTs as an investment opportunity and led purchasers to believe they could profit from Impact Theory’s efforts.

“Impact Theory emphasized that the company was ‘trying to build the next Disney,’ and, if successful, it would deliver ‘tremendous value’ to KeyNFT purchasers, and that the future value of the KeyNFTs would be significantly greater than their purchase price,” the SEC said.

The order states that Impact Theory violated Sections 5(a) and 5(c) of the Securities Act, which prohibit the unregistered offer and sale of securities. Without admitting or denying the findings, Impact Theory agreed to cease and desist from future violations and pay over $6 million in disgorgement and penalties.

A copy of the original filing can be found here.