Although stakeholders raised concerns about trademark misappropriation and infringement on NFT platforms, the study found that most stakeholders believe the existing laws and registration practices are sufficient. Therefore, the study concluded that no changes to intellectual property laws or registration practices are necessary at this time.
Some stakeholders expressed concerns about enacting NFT-specific legislation too prematurely, as it could impede the ongoing development and evolution of NFT technology. The study supports the viewpoint that enacting specific legislation for NFTs would be premature and could hinder the industry’s growth.
The US Securities and Exchange Commission (SEC) deemed the NFT offerings sold by Impact Theory to be securities because the company promised investors would profit from them. As a result, Impact Theory agreed to reimburse investors and pay a fine of $6.1 million. It is important to note that this case does not imply that all NFTs are considered securities by regulators.
The study also identifies the lack of controlling judicial precedent regarding the enforcement of trademark registrations for physical goods against the use of the same mark on similar digital goods tied to blockchains and NFTs.
The US Securities and Exchange Commission charged Stoner Cats 2, an NFT company which raised around 8 million dollars from investors to finance an animated web series called Stoner Cats. The animated series is produced by Mila Kunis’ production company.
The company used earnings from the sale of 10300 NFTs to pay a number of famous people involved in the project, like Mila Kunis, Ashton Kutcher, Chris Rock, Jane Fonda, or Ethereum founder Vitalik Buterin.
Whenever one of the NFTs was resold, the company received a 2.5 percent royalty. “The royalties created incentives to encourage individuals to buy and sell the NFTs on a secondary markets’ stated the SEC. Because of this SEC ruled Stoner Cats as an unregistered offering.
Stoner Cats 2, paid $1 million in fines, and agreed to destroy all of the NFTs in its possession.
Why does it matter
This is a second decision from the SEC that is tackling the unregistered offerings of the NFT products. While, creating and using NFT is not by any mean illegal, the promises about the profits that will be made with the NFT’s reselling, are clearly in collision with the US laws on financial securities.
The US Securities and Exchange Commission (SEC) has charged Los Angeles-based media and entertainment company, Impact Theory, with conducting an unregistered offering of crypto asset securities in the form of non-fungible tokens (NFTs). Impact Theory raised approximately $30 million from hundreds of investors, including those in the United States, through the offering.
According to the SEC’s findings, Impact Theory sold three tiers of NFTs called Founder’s Keys, presenting them as investments into the company. The company claimed that investors would profit if Impact Theory achieved success, likening their ambitions to building the next Disney.
The SEC’s order determined that the NFTs sold by Impact Theory were investment contracts, classifying them as securities under the US securities laws. As a result, Impact Theory violated securities laws by offering and selling these crypto asset securities to the public without registering them or qualifying for an exemption. Failing to register with SEC deprives investors of the protections provided by robust disclosures and other safeguards established by securities laws.
Without admitting or denying the SEC’s findings, Impact Theory agreed to a cease-and-desist order. The company will pay over $6.1 million in disgorgement, prejudgment interest, and a civil penalty. In addition, a Fair Fund will be created to refund the money paid by injured investors to purchase the NFTs. Impact Theory will also destroy all Founder’s Keys in its possession or control. Furthermore, the company must relinquish any future royalties it may receive from secondary market transactions.
Why does it matter?
This case underscores the importance of proper registration and compliance with securities laws for companies engaging in the offering of cryptocurrencies and other crypto assets, including NFTs. It also might set the precedent for future charges toward companies that create and offer the non-fungably tokens in the United States.
Mike Konduodis, an intellectual property lawyer, stated that individuals and businesses filed over 3,600 trademark applications for crypto-related services with the US Patent and Trademark Office in 2022, whereas in 2021, there were 3,516.
When it comes to NFT applications, they have also increased from 2,087 in 2021 to more than 5,800 in 2022. The number of trademark applications for the metaverse and Web3 has more than doubled, with nearly 4,150 applications for the metaverse and Web3 in 2022, and only 1,866 in 2021.
The Central African Republic (CAR) has launched the digital monetary system Sango aimed at modernising and uplifting the country’s economy and tokenising the country’s natural resources.
At the launch, President Faustin-Archange Touadéra stressed that ‘For us, the formal economy is no longer an option.’
British Army’s Twitter and YouTube accounts were hacked. The name of the Army’s Twitter account was changed, while videos on cryptocurrency, and posts related to NFTs appeared on their feed. The British Army stated there is no evidence as to who may be behind the hacking of the accounts. The accounts were restored to normal while investigations regarding the hacks are still ongoing. Army’s spokesperson stated that there will not be any further comments on the incident until the investigation is complete.
