1. SEC Accuses Flyfish Club of Raising $14.8 Million
2. Flyfish Agrees to Destroy All NFTs in Its Possession
3. Details of the SEC Settlement

The Securities and Exchange Commission (SEC) has reached a settlement with Flyfish Club, the company behind a high-profile NFT-based restaurant membership project. This agreement requires Flyfish to pay $750,000 in civil penalties for allegedly conducting an unregistered offering of crypto asset securities.

SEC Accuses Flyfish Club of Raising $14.8 Million

According to the SEC, Flyfish raised approximately $14.8 million between January 2022 and May 2022 by selling about 1,620 NFTs to the public, including U.S. investors. The NFTs were priced at 2.5 ETH (around $8400) and 4.25 ETH (around $14,300) for 'Omakase' membership, which was designed to grant exclusive access to a members-only restaurant in New York City. The SEC determined that Flyfish offered and sold these NFTs as investment contracts and classified them as securities under the Howey test, citing several factors contributing to this classification.

Flyfish Agrees to Destroy All NFTs in Its Possession

As part of the settlement, Flyfish has agreed to comply with the SEC's demands, including destroying all NFTs in its possession within 10 days, publishing a notice of this order on its website and social media channels, and removing all links to crypto asset trading platforms from their website and social media channels. Additionally, the company agreed to notify secondary market trading platforms that it will not accept further royalties from Flyfish NFTs and to assist the commission staff in the administration of a distribution plan.

Details of the SEC Settlement

The firm has not admitted to nor denied the SEC’s allegations. The $750,000 penalty will be paid in installments: an initial $350,000 is due within 14 days of the order, $200,000 by December 31, 2024, and the final $200,000 within 12 months of the order.

The settlement between the SEC and Flyfish Club highlights the importance of adhering to regulatory requirements for crypto asset offerings, serving as a reminder for companies to carefully assess the legal status of their offerings.