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SEC In Turmoil: Internal Rebellion Erupts Over NFT Showdown, Regulators At War?

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In a recent development, two prominent commissioners at the US Securities and Exchange Commission (SEC), Mark Uyeda and Hester Peirce, have expressed their dissent against the agency’s enforcement action on Non-Fungible Tokens (NFT).

As reported by Bitcoinist on Monday, the SEC had initiated legal proceedings against media and entertainment company Impact Theory, which resulted in a cease-and-desist order and a substantial financial penalty of over $6.1 million.

Commissioners Uyeda and Peirce, known for their support of innovation within the crypto industry, voiced their disagreement with the SEC’s classification of certain NFT sales as securities.

They emphasized their concerns about applying the Howey analysis, a legal framework used to determine whether an investment contract exists. They called for a deeper examination of the issues surrounding NFTs before pursuing additional enforcement actions.

SEC Commissioners Clash Over NFT Crackdown

The settlement involving Impact Theory centered around allegations of the company engaging in an unregistered securities offering through the sale of NFTs. While the settlement did not include fraud charges, Impact Theory agreed to pay disgorgement, prejudgment interest, and civil penalties.

The case highlighted the company’s sale of nearly $30 million worth of NFTs, accompanied by ambitious promises of their future value appreciation. However, the NFTs did not represent company shares or provide dividends to purchasers.

The dissenting commissioners acknowledged the SEC’s concerns regarding the hype surrounding NFT sales and the potential risks investors face. However, they argued that the statements made by the company and purchasers did not meet the criteria for an investment contract.

They drew comparisons to the sale of tangible items like watches, paintings, or collectibles, where vague promises related to brand building and resale value appreciation do not typically lead to enforcement actions.

Moreover, the settlement bet

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Author: Ronaldo Marquez

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