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Bored Ape Yacht Club Under Investigation by the SEC?

As of October 11th, sources have confirmed that the SEC (Securities and Exchange Commission) are actively investigating in Bored Ape Yacht Club (BAYC)’s creators Yuga Labs over a potential violation of federal law.

It is important to first understand that the SEC has been looking into NFTs very closely since March. Therefore, the fact that certain projects like BAYC will go under investigation should not be a surprise to anyone. 

According to a person familiar with the case who declined to be identified in the Bloomberg article due to confidentiality, the SEC is looking into whether some Non-Fungible Tokens (NFT) are more comparable to stocks and should adhere to the same disclosure regulations. 

Similarly, one of Wall Street’s main regulators is also investigating how ApeCoin was distributed to owners of Bored Ape Yacht Club and other NFTs. The currency that was initially created to serve “Web 3.0.”

According to Yuga Labs’ official position, ApeCoin was not created by the company, ostensibly because of regulatory considerations. Instead, the Ethereum-based currency, which is intended to be utilised throughout the expanding Bored Ape ecosystem of applications and marketplaces, is “stewarded” by the Ape Foundation, according to the official ApeCoin website.

The Ape Foundation is led by a board of famous Web3 creators, including Yat Siu, the co-founder of Animoca Brands, Alexis Ohanian, the co-founder of Reddit and the head of FTX Ventures Amy Wu.

Furthermore, according to the Bloomberg article, Yuga Labs has not yet been charged with any misconduct and may not be indicted at all in connection with the investigation.

Yuga Labs released the following statement on the matter:

“It’s well-known that policymakers and regulators have sought to learn more about the novel world of Web3. We hope to partner with the rest of the industry and regulators to define and shape the burgeoning ecosystem,” Yuga Labs told Bloomberg in a statement. “As a leader in the space, Yuga is committed to fully cooperating with any inquiries along the way.”

This doesn’t seem so bad right? But the news has been hitting the holders of the BAYC Ecosystem rather hard. 

BAYC Average Sale Price: -26.06%

Mutant Ape Yacht Club (MAYC) Average Sale Price: -3.66%

And as for ApeCoin, the graph below shows a clear identification of when the news hit and how it affected the value.

In my opinion, I believe that the SEC has been a louring day for many people in the NFT Community and talked about in an extremely negative manner and how it will be the thing that stops the hype train that is NFTs. 

I for one see this very differently. 

I think that for Cryptocurrencies and NFTs to eventually become a part of our daily lives and be regularised, we need to go through these steps. I believe that this is one of the only ways that we will start to get the “policymakers and regulators” to understand the space we love and bring all the ideas and concepts we have about Web 3.0 and cryptocurrencies to fruition. Furthermore, BAYC is just the beginning as it is the first NFT anyone sees let alone the SEC when they start looking into NFTs. I’d get prepared for this to be an ongoing investigation into many different projects that have a similar or “inspired” ecosystem to BAYC’s.

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