Bloomberg reports, citing an anonymous source with knowledge of the situation, that the U.S. Securities and Exchange Commission is investigating Yuga Labs, the designer of the Bored Ape Yacht Club NFT collection, to see if its sales of digital assets violate federal law.
101 Bored Ape Yacht Club. Courtesy of Sotheby’s.
The issue is whether Yuga’s non-fungible tokens are similar to stocks and subject to the same disclosure regulations. According to Bloomberg, the question is if NFTs are securities as the SEC has allegedly researched this matter since March. Reportedly, NFT founders and crypto exchanges were being investigated.
The SEC is also looking into the distribution of apeCoins, the Ethereum-based governance and utility tokens in the APE ecosystem, to members of the Bored Ape Yacht Club, Bored Ape Kennel Club and Mutant Ape Yacht Club. The tokens were initially introduced in March when the community-driven ApeCoin DAO and Ape Foundation were established.
62% of the fixed one billion apeCoin supply was distributed to the ApeCoin community, with 15% airdropped to current NFT holders. Together with launch contributions and the four founders of Bored Ape Yacht Club, additional percentages of tokens were granted to Yuga Labs and the Jane Goodall Legacy Foundation.
At the time, the accompanying press materials seemed to take considerable measures to differentiate ApeDAO’s token launch from the Bored Ape Yacht Club NFT collection. Because club-style NFTs with benefits for long-term members might resemble investment contracts, attracting the SEC’s interest.
After the release of Bloomberg’s story, the value of ApeCoin fell by roughly 8%. A representative for Yuga Labs acknowledged that the company was participating in the SEC’s investigation into the situation.
“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,” according to the firm spokeswoman.
