Things are not going all that well in the world of NFTs right now – values are plunging, scams and hacks have grown frequent, and people have resultantly started to question their long-term viability. As if all that wasn’t enough, the creator of the web’s most popular NFT art has now come under the investigation of the US SEC, in a further blow to blockchain-based digital assets.
Yuga Labs, the creator of the Bored Ape Yacht Club NFT collection, has come under investigation by the US Securities and Exchange Commission over whether sales of its digital assets violate federal law, according to a Bloomberg report citing an unnamed source close to the matter has revealed.
SEC is apparently questioning the categorization of some of Yuga’s NFTs, checking whether they are closer to stocks. If that indeed is the case, then 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 being looked at as well. 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 per cent 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.