Report Claims SEC Is Investigating Yuga Labs, Maker of the Bored Ape Yacht Club NFT, for Possible Unregistered Offerings

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Last Updated on October 12, 2022 by Bitfinsider

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 determine if its sales of digital assets violate federal law.

The question, according to a source, is whether some of Yuga’s non-fungible tokens are similar to stocks and should therefore be subject to the same disclosure rules. According to Bloomberg, the major legal question in the investigation is whether NFTs are securities; the SEC has reportedly been researching this subject since March. According to those with knowledge of the situation at the time, NFT founders and crypto exchanges were being investigated.

Reportedly, the SEC is also investigating the distribution of apeCoins, the Ethereum-based governance and utility tokens utilized within the APE ecosystem, to members of the Bored Ape Yacht Club, Mutant Ape Yacht Club, and Bored Ape Kennel Club. The tokens were first 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 existing NFT holders. Along with launch contributors and the four founders of Bored Ape Yacht Club, additional percentages of tokens were granted to Yuga Labs and the Jane Goodall Legacy Foundation.

Following the release of Bloomberg’s coverage, the value of ApeCoin fell by roughly 8%.

A representative for Yuga Labs acknowledged that the company was participating with the SEC’s investigation into the matter. The spokesperson said: “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.”

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