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Bored Ape and other NFT projects under federal investigation

SEC starts a probe over Yuga labs to determine whether the NFT market is violating federal laws

Shashank Bhardwaj
Published: Oct 13, 2022 03:13:02 PM IST
Updated: Oct 13, 2022 03:34:42 PM IST

Bored Ape and other NFT projects under federal investigationImage: Shutterstock

A report from Bloomberg on October 11 aims towards the NFT market getting into trouble. It cites a familiar source, suggesting that the Bored Ape project and other NFTs might be looked over in assumptions of violating federal policies. Yuga labs, the creator of multiple NFT projects, says it looks at the brighter side of the whole scenario. The underlying investing is to check the possibility of illegal fundraising.

Multiple sources suggest that the ongoing investing is not limited to just Yuga labs. The Securities and Exchange Commission (SEC) has launched a probe against the NFT market. Yuga labs projects seem to be a part of the investigation to check whether the NFTs are more akin to stocks. The SEC is also looking at illegal trading of digital assets. In March 2022, anonymous sources pointed out a possible investigation from the SEC against NFT creators and marketplaces. It stated that the investigation might be to check whether NFTs are being used to raise funds in the name of traditional securities.

SEC has refrained from commenting on the existence or non-existence of an ongoing investigation. On the other hand, Yuga labs are rather positive about this whole situation. The company looks at this scenario as an opportunity for policymakers 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 space, Yuga is committed to fully cooperating with any inquiries along the way,” the official statement from Yuga labs read.

Sources also state that the investigation also looks into the distribution of ApeCoin to the holders of Bored Ape Yacht Club and other NFT projects. Yuga labs are one of the community members in ApeCoin distribution and are therefore under investigation. The company might adopt ApeCoin as the primary token across its NFT projects. The whole scenario is under the SEC’s microscope. It is yet unknown what route this whole investigation aims at taking.

In a public statement, Yuga Labs 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."

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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