The U.S. Securities and Exchange Commission (SEC) has fined Flyfish Club, a restaurant project, with a hefty $750,000 settlement for allegedly selling unregistered crypto asset securities.
Case Details
According to a cease and desist order issued on September 16, Flyfish Club sold 1,600 NFTs to U.S. investors, making $14.8 million. The SEC claims these NFTs, which were meant to provide access to a yet-to-be-built Manhattan restaurant, were essentially securities and thus needed to be registered.
SEC Criticism
However, SEC Commissioners Hester Peirce and Mark Uyeda have voiced strong criticism against this move. They argue that Flyfish Club’s NFTs were merely a novel way to sell restaurant memberships and shouldn’t fall under securities laws.
Flyfish Club's Reaction and Future of NFTs
Flyfish Club, led by entrepreneur Gary Vaynerchuk, who gained fame during the 2021 NFT boom, will destroy all remaining NFTs and will not accept future royalties from NFT sales as part of the settlement. The restaurant is scheduled to open this month.
This enforcement action is part of a broader crackdown by the SEC on NFT projects, raising questions about the balance between regulation and innovation in the rapidly evolving world of NFTs.
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