Bored Ape Yacht Club (BAYC) creator Yuga Labs faces a probe from the US Securities and Exchange Commission (SEC), according to Bloomberg. The investigation is to inquire whether the Bored Ape Yacht Club NFT collection violated federal law.
NFTs are not in their best shape now. The whole hype seems to have worn off, which is evident in the notable drop in NFT sales on several NFT marketplaces, including OpenSea.
SEC is examining whether BAYC NFTs are securities
As per the details from the person familiar with the matter, the SEC is looking into the possibility of whether a few of the NFTs sold by Yuga Labs are similar to securities and whether they should follow similar rules.
The SEC is also looking into how ApeCoin was distributed to owners of the Bored Ape Yacht Club and associated NFTs. The probe has not yet been made public, and the investigation doesn’t prove that Yuga Labs has committed any misconduct.
“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,” Yuga said in a statement.
The SEC is also looking into the possibility of whether ApeCoin is similar to a security. BAYC distributed APE to the holders and also provided the holders with a voice in their DAO.
The regulators have increased the scrutiny of digital assets, crypto firms, and the whole crypto market in general. It is a part of the continuous efforts to ensure that the whole market and crypto firms follow the regulations.
Story behind popular Bored Ape Yacht Club
IN 2019, THE Italian artist Maurizio Cattelan duct-taped a banana from a local supermarket to a gallery wall at Miami’s Art Basel festival. He called it Comedian and sold it for $120,000. The buyers didn’t need to worry about the banana rotting, because it wasn’t included in the purchase.
What they had really paid for was a certificate of authenticity, which included instructions on the correct angle and height at which to affix fruit to a wall.
Since Cattelan’s triumph in South Florida, Miami has fashioned itself into an incubator for a different kind of gimmicky art. The city is now a crypto epicenter, with a mayor who took his paycheck in bitcoin.
It’s also the birthplace of the Bored Ape Yacht Club, a collection of non-fungible tokens, or NFTs, launched by a startup called Yuga Labs in spring 2021. Each NFT corresponds to a cartoon ape customized with unique color schemes, facial expressions, and outfits. According to Wired
(One ape, for example, is brown, clean-shaven, wearing sunglasses; another is leopard-print, with a rainbow-colored grill in its grinning mouth.) In its initial run, the BAYC made around $2 million. From there, prices went up. Auction house Sotheby’s recently sold a set of 107 apes for over $24 million.
Gwyneth Paltrow, Eminem, Shaquille O’Neal, Post Malone, Snoop Dogg, Mark Cuban, and Steph Curry are just a few of a growing group of celebrity boosters. During a recent Tonight Show interview, Jimmy Fallon and Paris Hilton hyped ape ownership in a conversation that was akin to a bad infomercial. Rumors have surfaced that both of them have invested more than half a million dollars into the BAYC, a fair bit of pocket change for both.