Written by 2:40 pm Cryptocurrency

Yuga Labs Faces SEC Probe Over Unregistered Offerings

  • A regulator on Wall Street is looking into whether NFTs are securities
  • ApeCoin Price at the time of writing – $4.71
  • The investigation may not result in allegations of misconduct

The popular Bored Ape Yacht Club collection of NFTs’ creator, Yuga Labs Inc., is the subject of an investigation by the US Securities and Exchange Commission into whether the sale of its digital assets violates federal law.

According to a person who is familiar with the situation but requested anonymity due to the private nature of the investigation, the SEC is looking into whether certain nonfungible tokens produced by the Miami-based company are more comparable to stocks and should adhere to the same disclosure guidelines. 

SEC wants to make sure the crypto market adheres to its regulations

The distribution of ApeCoin, which was given to holders of Bored Ape Yacht Club and related NFTs, is also being examined by the primary regulator on Wall Street.Web3, a vision of a decentralized internet based on blockchains, inspired the creation of cryptocurrency.

The SEC has not initiated a probe into Yuga, and the agency has not threatened to sue the company. It is common knowledge that regulators and policymakers have sought more information about the novel world of the web3. 

In a statement provided to Bloomberg News, Yuga stated, they hope to partner with the rest of the industry and regulators to define and shape the burgeoning ecosystem. Yuga, a market leader, has pledged to fully cooperate with any inquiries at any stage.

The SEC declined to provide any additional information. The latest effort by SEC Chair Gary Gensler to ensure that the cryptocurrency market abides by its regulations is the investigation. 

Gensler has stated on multiple occasions that the majority of crypto assets should be regulated by the agency due to their resemblance to securities as defined by a Supreme Court decision from the 1940s. 

ALSO READ: Government-backed metaverse city launched by Multiverse Labs

Yuga Labs was founded in 2021

As a result of that decision, the agency now has the authority to classify investments as securities whenever management profits are anticipated. 

The regulator has brought dozens of enforcement cases against digital asset companies for failing to register their offerings over the past few years. In February, BlockFi Inc. was fined $50 million.

Yuga Labs, which was established in 2021, is now one of the most well-known crypto brands. It sells NFTs of cartoon primates, which are a sought-after status symbol and frequently fetch hundreds of thousands of dollars. Buyers include Madonna and Jimmy Fallon.

Steve Anderrson
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