While the crypto bros lose their shirts over those monkey jpegs that they dreamed were worth $300,000, the Securities and Exchange Commission is opening an investigation into those NFTs’ creator, Yuga Labs.
One fun thing to do is wonder how much money people have lost if they bought the hype and invested real money in cryptocurrency when they saw all those Super Bowl crypto ads in February. Someone is actually tracking that, or something fairly similar. The editor of the sarcastically named blog Web 3 Is Going Great has tracked the value of these things since the New York Times ran the somewhat-derided “Latecomer’s Guide to Crypto” (published a month after the Super Bowl). And as of late September, you have lost 55% of your money if you invested in Bitcoin and/or Ethereum when that piece ran.
Another thing that happened shortly after the Super Bowl was the emergence of “Bored Ape” NFT murals in the Mission District. Those NFTs (non-fungible tokens, and no I am not going to explain these here) are the creation of a Miami-based company/collective called Yuga Labs, who are probably the biggest fish in the floundering NFT market. And on Tuesday, Bloomberg reported that Yuga Labs is under investigation by the U.S. Securities and Exchange Commission.
⚡️ The US SEC is investigating Yuga Labs, the creator of the popular Bored Ape Yacht Club collection of NFTs, over whether sales of its digital assets violate federal law https://t.co/eRZRuPwKcA— Bloomberg Crypto (@crypto) October 11, 2022
Bloomberg’s report is based on information from an anonymous source, so we don’t know why Yuga Labs is being investigated. They may not be charged or found guilty of any wrongdoing. But we do know that new SEC commissioner Gary Gensler is keen to hold cryptocurrency and NFTs to the same regulatory standards as legitimate investments. He told the New York Times last month that crypto and NFTs “have features similar to, and potentially competing with, money market funds, other securities and bank deposits,” and as such, should have the same disclosure requirements, so people know that their investments aren’t anonymous scams cooked up by con artists or 14-year-olds.
Yuga Labs said in a statement to Fortune that “It’s well known that policymakers and regulators have sought to learn more about the novel world of Web3,” and that “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.”
But this may be a sign that the “Anything Goes” days are over for these highly touted but very questionable Web3 properties. Last week, Kim Kardashian was fined $1.26 million for her promotional role in a pump-and-dump cryptocurrency scheme, with Gary Gensler’s SEC issuing that fine. So it may be a turning point for the crypto community, and a turning point for the rest of us too. Because a regulatory and prosecutorial crackdown may lead to a whole lot of looming cryptocurrency and NFT media coverage that we will actually enjoy reading.
Image: Joe Kukura, SFist