sec examinations

Impact Theory Charged by SEC for Unregistered Offering of Crypto Asset Securities

The Securities and Exchange Commission (SEC) has taken action against Impact Theory, LLC, a prominent media and entertainment company headquartered in Los Angeles. The SEC has charged the company with engaging in an unregistered offering of crypto asset securities through purported non-fungible tokens (NFTs). Impact Theory managed to accumulate approximately $30 million from a diverse group of investors, including individuals from across the United States, during the course of this offering.

Uncovering the Unregistered Offering

According to the SEC final order, Impact Theory executed the offering and sale of three distinct tiers of NFTs between October and December of 2021. These tiers were aptly named “Legendary,” “Heroic,” and “Relentless,” collectively referred to as Founder’s Keys. The SEC’s order reveals that Impact Theory strategically positioned the acquisition of a Founder’s Key as an investment into their business. The company indicated to potential investors that they stood to gain profits from their purchases if Impact Theory succeeded in its endeavors. In its marketing efforts, Impact Theory went so far as to compare its aspirations to become “the next Disney,” asserting that its success would generate substantial value for purchasers of Founder’s Keys. As per the SEC’s findings, the NFTs that were sold to investors represented investment contracts and were thus classified as securities.

Violation of Federal Securities Laws

The result of these actions is that Impact Theory contravened federal securities laws by conducting a public offering of these crypto asset securities without adhering to the required registration process. Antonia Apps, the Director of the SEC’s New York Regional Office, emphasized, “Offerings of securities, in any manifestation, must be registered unless a valid exemption exists.” She highlighted that the absence of registration denies investors of various kinds the protective measures that have long been upheld by securities laws, including comprehensive disclosures and safeguards.

Implications and Consequences

Impact Theory, without admitting or denying the SEC’s findings, has agreed to a cease-and-desist order that acknowledges its violation of the registration provisions outlined in the Securities Act of 1933. As part of the resolution, the company has committed to paying a total sum exceeding $6.1 million. This sum encompasses disgorgement, prejudgment interest, and a civil penalty. Additionally, a Fair Fund will be established to facilitate the return of funds to investors who suffered losses due to this unregistered offering of NFTs.

Impact Theory has committed to various actions, including the destruction of all Founder’s Keys currently in their possession or under their control. The company will also publicize the order on its official websites and social media platforms. Furthermore, any potential royalties that Impact Theory might have received from future secondary market transactions involving Founder’s Keys will be waived.

For more information, or to speak to a securities attorney, visit New York Securities Lawyer at

Read the Full Press Release

Have a securities law question? Call New York Securities Lawyers at 212-509-6544.

+ posts
The Securities Lawyer