SEC Charges Impact Theory Podcaster For NFTs

Check out the biggest breaking crypto market updates for today:

Crypto Giant Binance Considers Russia Exit

According to a Wall Street Journal report, crypto exchange Binance is considering a withdrawal of its services from Russia, “including a full exit.” 

The move comes as a result of sanctions from countries including the United States. Notably, Binance just recently removed certain sanctioned Russian financial institutions from available payment options on its peer-to-peer platform. 

Earlier this year Binance hired Noah Perlman, a former Morgan Stanley executive, as its compliance chief. Binance moved Monday to further limit its Russian peer-to-peer trading service, telling users in Russia that they are not allowed to exchange digital tokens for currency other than rubles. 

Other crypto platforms are more active in Russia. For example, OKX offers P2P trades of rubles for digital token, its website showed. “OKX serves global users, including Russian users, incompliance with applicable sanctions requirements,” a spokesman said. 

Binance also isn’t alone in offering exchange-based trading involving rubles. Several other exchanges continue to process ruble-to-crypto trades, according to CCData. They include ByBit,, and KuCoin, among others. 

Binance’s sanction violation comes after a major unveiling that, despite the crypto exchange claiming that it no longer allowed customers to pay each other through sanctioned Russian banks, it was. 

Accusations were first made on August 22, in whichexamination of the service websiteproved that Russian clients could access payment processing through sanctioned lenders, including Russia’s biggest banks, Sberbank and Tinkoff. 

It was just three days later, on Aug. 25, that the exchange’s P2P service no longer recommended the five blacklisted RUssian financial institutions as a way to send and receive rubles. 

Given that the exchange is still dealing with legal and regualtory issues in the United States and many other parts of the globe, including the SEC’s filing against the change and CEO Changpeng Zhgao for deceptive practices, an exit might be a reasonable step.

DCG Reaches Agreement With Genesis Creditors To Deliver Recoveries of Up To 90%

According to recent court filings, Digital Currency Group (DCG) – the parent company of bankrupt trading firm Genesis Global Holdco – has reached an in-principle deal with Genesis creditors to resolve the claims brought up in Genesis’ bankruptcy.

According to the filing, Genesis currently holds liabilities including the payment of about $630 million in unsecured loans due in May 2023 and a $1.1 billion unsecured promissory note due in 2032. 

Under the in-principle deal, DCG plans to take up new debt facilities and a repayment agreement. This could result in the recovery of 70%-90% in USD equivalent for unsecured creditors and 65%-90% recovery on an in-kind basis depending on the denomination of the digital asset. 

In January, Genesis filed for Chapter 11 bankruptcy protection in New York federal bankruptcy court after it took a financial hit following the collapses of crypto hedge fund Three Arrows Capital and FTX last year. 

Genesis owes around $3.6 billion to its top 50 creditors, including claims from Gemini, the crypto exchange founded by the Winklevoss twins. 

SEC Charges Podcaster In First Unregistered Securities Sales Claim Against An NFT Offering  

The United States Securities and Exchange Commission (SEC) has reportedly charged Impact Theory, a Los Angeles-based media and entertainment company, with conducting unregistered securities sales. 

Specifically, the charges related to the $30 million raised by the entity via the sale of NFTs between October and December 2021. Impact Theory is co-founded by Tom Bilyeu and produces entertainment and educational content, including several podcasts. 

The SEC stated, 

“[The company] encouraged potential investors to view the purchase of a Founders Key as an investment into the business, stating that investors would profit from their purchases if Impact Theory was successful in its efforts. The order finds that the NFTs offered and sold to investors were investment contracts and therefore securities.” 

The SEC claimed that the NFTs were investment contracts, and so securities, and the company violated the Securities Act of 1933 by selling them without registration. 

It issued a cease-and-desist order that Impact Theory has agreed to. 

Under the SEC order, the company was ordered to pay a total of more than $6.1 million in disgorgement, prejudgement interest and a civil penalty, without admitting to or denying the agency’s findings. Further, a fund will be created to return money to investors in Founder’s Key NFTs. 

Impact Theory will destroy all Founder’s Keys in its possession or control, publish a notice of the order on its websites and social media channels, and not receive royalties from future sales of the NFTs on the secondary market. 

According to NFT Stats, a “Legendary” (top) tier Founder’s Key NFT last sold two days ago for $1,468 as one of 10 sales in the last week. 

The token supply is 13,572 with 4,620 owners. The Founder’s Key is only one suite of nFTs the company offers. 

This was the SEC’s first enforcement action involving an NFT, SEC commissioners Hester Peirce and Mark Uyeda wrote in their dissent of the action. “The NFTs were not shares of a company and did not generate any type of dividend for the purchasers,” they wrote, adding, 

“We share our colleagues’ worry about the type of hype that entices people to spend almost $30 million for NFTs seemingly without having a clear idea about how they will use, enjoy, or profit from them. This legitimate concern, however, is not a sufficient basis to pull the matter into our jurisdiction.” 

The promises made by Impact THeory and cited in the SEC order “are not the kinds of promises that form an investment contract.” The commissioners compared the promises made about the NFTs to statements made by sellers of collectibles. 

They went on to suggest a list of nine questions the agency should consider before pursuing NFT cases: 

“Regardless of what one thinks of the Howey analysis, this matter raises larger questions with which the COmmission should grapple before bringing additional NFT cases.”

Luke Baldwin