The main legal core issue of the investigation is whether the project’s NFTs and tokens classify as securities according to Bloomberg.
The U.S. Securities and Exchange Commission is looking into whether Yuga Labs, the company behind the Bored Ape Yacht Club NFT collection, sold any of its digital assets in violation of federal law according to a Bloomberg report citing an unnamed source familiar with the situation.
The question, according to the source, is whether some of Yuga’s non-fungible tokens are more comparable to stocks and should therefore adhere to the same disclosure regulations.
The most important legal issue at the heart of the investigation, according to Bloomberg, is whether NFTs are securities. The SEC has reportedly been looking into this issue since March. NFT developers and cryptocurrency exchanges were reportedly being investigated at the time, according to people with knowledge of the situation.
Yuga Labs’ cooperation with the SEC’s investigation was confirmed by a spokesperson for the firm.
“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,” said the spokeswoman.
The distribution of apeCoins, the Ethereum-based governance and utility tokens utilized within the APE ecosystem, to holders of Bored Ape Yacht Club, Mutant Ape Yacht Club, and Bored Ape Kennel Club members is another matter that the SEC is apparently investigating.
The creation of the community-run ApeCoin DAO and the Ape Foundation coincided with the first announcement of the tokens in March. The ApeCoin community received 62% of the fixed one billion apeCoin supply, including 15% airdropped to current NFT holders.
Along with launch contributors, the four founders of Bored Ape Yacht Club, and Yuga Labs, additional percentages of tokens were given to the Jane Goodall Legacy Foundation.
Club-style NFTs with benefits for long-term members may begin to resemble investment contracts and pique the SEC’s curiosity.
Following the publication of Bloomberg’s story, ApeCoin is down about 11% today.