SEC Takes First NFT Enforcement Action Against Impact Theory


  • The U.S. SEC has taken its first enforcement action against an NFT project, charging LA-based podcasting studio Impact Theory.
  • Impact Theory, co-founded by Tom Bilyeu, raised about $30 million from investors through the “Founder’s Key” NFT, which the SEC deems as securities.
  • The SEC has fined Impact Theory $6.1 million and ordered the destruction of all “Founder’s Key” NFTs.

The U.S. Securities and Exchange Commission (SEC) has taken its first enforcement action against a non-fungible token (NFT) project. The regulatory body charged Los Angeles-based podcasting studio Impact Theory for “conducting an unregistered offering of crypto asset securities.” The studio, co-founded by Tom Bilyeu, had raised approximately $30 million from hundreds of investors.

Impact Theory is not just any podcasting studio, it is a well-known YouTube channel with over 3.7 million subscribers. The SEC’s action revolves around the studio’s offering of a “Founder’s Key” NFT, which the company promoted as an investment opportunity. According to the SEC, the NFTs sold by Impact Theory were investment contracts and therefore fell under the category of securities.

The SEC has ordered Impact Theory to pay $6.1 million in penalties and interest. While the company has neither admitted nor denied the SEC’s findings, it has agreed to a cease-and-desist order. Furthermore, Impact Theory will destroy all Founder’s Key NFTs in its possession and will issue a notice about this on its website and social media channels.

The SEC’s action has sparked a debate among its own commissioners. Republican Commissioners Hester Peirce and Mark Uyeda criticized the agency’s move, questioning the application of the Howey Test—a legal standard used to determine what constitutes an investment contract. They argued that the SEC should consider larger questions before taking additional actions in the NFT space.

The SEC’s action against Impact Theory marks a significant step in the regulatory landscape surrounding NFTs. It serves as a cautionary tale for other NFT projects, emphasizing the need for clarity and compliance with existing securities laws. As the regulatory framework around digital assets continues to evolve, companies venturing into this space must tread carefully to avoid similar legal pitfalls.