Yuga Labs is reportedly facing an investigation by the U.S. Securities and Exchange Commission (SEC) over the legality of its sales of high-value NFT products.
The SEC’s investigation of Yuga Labs is focused on determining whether its various digital assets currently for sale violate federal law. These include the Bored Ape Yacht Club NFT collection, its derivative NFT collection, and the BAYC community’s proprietary cryptocurrency, ApeCoin. The survey follows a global trend towards tighter regulation of the cryptocurrency and NFT space.
Yuga Labs responded to the news of the SEC’s investigation: “As a leader in the field, Yuga Labs will fully cooperate with the SEC’s relevant investigation. Policymakers and regulators are trying to learn more about the Web3 world, and we hope to cooperate with other industries and regulators. Collaborate to define and shape a thriving crypto ecosystem.”
When the Bored Ape Yacht Club NFT series debuted in 2021, it arguably drove most of the hype, seeing NFTs take their first steps in the mainstream conversation. The 2021 bull run in the NFT market has taken hold in wider pop culture, thanks in part to how celebrities have posted these high-priced NFTs on their social media platforms. Heading into 2022, and while the bear market continues, we are starting to see the seeds Yuga Labs sown through the various ways that Bored Ape holders will commercialize their NFTs.
At the same time, Yuga Labs also owns 5 of the top 8 NFT series, which account for more than 25% of the entire market capitalization of all NFT projects:
- Bored Ape Yacht Club
- CryptoPunks
- Otherdeed
- Mutant Ape Yacht Club
- Meebits
According to Bloomberg, the Yuga Labs investigation is the latest attempt by SEC Chairman Gary Gensler to ensure that the cryptocurrency market complies with his regulations. Gensler has repeatedly said that most crypto assets should be regulated by the agency. What’s next? The key legal question is whether NFTs are securities as defined by the agency.
Going after Yuga Labs instead of the likes of Nancy Pelosi, Citadel and Blackrock just shows the world that the SEC doesn’t care about justice, consumer protection or financial regulation, according to crypto KOL satviksethi.eth analysis. The SEC is concerned with maintaining dominance and ensuring that TradFi continues to maintain full control.
J1mmy, founder of AvaStarsNFT, said: “The SEC’s investigation of Yuga Labs is a necessary step in the overall adoption of NFT and Web3. I hope that once this business is over, their brand will become stronger.”