SEC to audit Yuga Labs for distribution of unregistered securities

The regulator will find out whether NFTs from the Bored Ape Yacht Club collection and the ApeCoin token fall under its jurisdiction

12.10.2022 - 09:00

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2 min

What’s new? According to Bloomberg, the US Securities and Exchange Commission (SEC) has launched an investigation into Yuga Labs, the creator of the Bored Ape Yacht Club (BAYC) NFT collection. The regulator intends to find out whether the company’s non-fungible tokens and native coin, ApeCoin (APE), fall within the definition of securities. According to Yuga Labs, the SEC has not yet filed any charges, and the case may not go any further than an investigation.

Bloomberg’s material

More details about the situation. The creators of the BAYC collection also noted that they fully cooperate with the authorities and comply with their requests in a timely manner.

“It’s well-known that policymakers and regulators have sought to learn more about the novel world of Web 3.0. We hope to partner with the rest of the industry and regulators to define and shape the burgeoning ecosystem,” Yuga Labs notes.

BAYC is one of the most expensive NFT collections. It consists of 10 000 unique images of monkeys on the Ethereum blockchain as ERC-721 tokens. Yuga Labs’ project governance token is APE, as of October 12, 07:30 UTC, the asset is trading at $4,693, down by 8,73% per day, according to Binance.

In late August, the SEC also opened an investigation into digital asset staking programs of crypto exchange Coinbase. The company received subpoenas to appear before the SEC as part of the investigation, as well as “requests from the SEC for documents and information about certain customer programs, operations and existing and intended future products.”

In September, SEC Chair Gary Gensler said that after Ethereum’s transition to PoS, the regulator may begin treating ETH as security. The asset must pass the Howey test, which will determine whether the token is a security. The test should reveal whether investors expect income from third-party work. In the case of Ethereum, that could be evidenced by the presence of a staking feature.

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