- As per a Bloomberg report, Yuga Labs is facing an investigation from the United States Securities and Exchange Commission (SEC) on the legality of the sales of its high-value NFT offerings.
- Most notably, that includes pieces from the renowned Bored Ape Yacht Club collection that’s turned PFP NFTs into a Web3 household name.
- Best-known in the NFT space for creating the Bored Ape Yacht Club NFT collection, Yuga Labs has used the success of its flagship project to build a burgeoning media empire, spanning endorsements from major sports leagues, high fashion brands, and even a metaverse-ready gaming experience.
- This investigation has not been spurred on by wrongdoing on the part of Yuga Labs. Instead, it is meant to serve as a way for policymakers and regulators can “learn more about the novel world of Web3,” as a Yuga Labs spokesperson mentioned in the Bloomberg report.
Why it matters
The focus of the United States Securities and Exchange Commission’s (SEC) investigation into Yuga Labs is to determine if the various digital assets it currently has up for sale are in violation of federal law. That includes the Bored Ape Yacht Club NFT collection, its derivative NFT collections, and ApeCoin, the BAYC community’s proprietary cryptocurrency. This investigation follows a worldwide trend towards greater regulation in the crypto and NFT spaces. The European Union and the White House have both spearheaded initiatives to make these relatively-new spaces more friendly — and safe — for investors and consumers alike.
But why look into Yuga Labs specifically? When the Bored Ape Yacht Club NFT collection first burst onto the scene in 2021, it arguably drove most of the hype that saw NFTs make their first big steps into the mainstream conversation. Thanks in part to how celebrities plastered these high-ticket NFTs onto their social media platforms, the NFT market’s 2021 bull run had something of a moment in wider pop culture. Into 2022, and despite the ongoing bear market, we’re starting to see the seeds planted by Yuga Labs sprout via the various ways that Bored Ape holders have been commercializing their prized NFTs.
Of course, all this continued buzz has to come at a cost. Yuga Labs’ exponential growth into one of the internet’s premier brands has understandably led to the company being placed under a more watchful lens of scrutiny. After weathering a PR storm that saw a user drumming up baseless allegations toward its founders, Yuga Labs now has the SEC on its back. But that might not be such a bad thing.
Currently, Yuga has shown a great willingness to cooperate with the SEC as it conducts its investigation and hopes that other notable projects in the NFT space can follow its lead in embracing transparency. “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,” said a Yuga Labs spokesperson to Bloomberg.
Could this investigation spark interest in amending nearly century-old decisions from the Supreme Court? There is a possibility. Also mentioned in the Bloomberg report is the Howey test — which originated from a 1946 Supreme Court ruling. Can this comparably ancient metric hope to categorize what might define the finance of the future? Only time will tell. But based on Yuga Labs’ cooperation, the NFT space may continue chugging along as usual.