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Yuga Labs, the company behind Bored Ape Yacht Club and Otherside Metaverse, potentially in hot water. The U.S. Securities and Exchange Commission has launched an investigation against them. What will this mean for the Bored Apes and the entire NFT market? We will be watching closely to see how this pans out.
Why is the SEC investigating BAYC?
According to a Bloomberg report, Yuga Labs is under investigation. The company behind the most popular NFT collection has appeared in the SEC's crosshairs.
The SEC is trying to determine whether the products Yuga offers violate federal laws. The SEC will check whether NFTs are more similar to stocks or securities. If so, they should follow the same disclosure rules as similar stocks.
But bored apes won't be the only object of scrutiny — ApeCoin (APE) might be too.
The U.S. regulator is examining the distribution of ApeCoin (APE). The SEC's mission is to determine whether APE is an unregistered security. APE was initially airdropped to the Bored Ape Yacht Club holders before listings.
APE has already reacted to the news. Yuga Labs' flagship coin opened the day at $5.25 and plunged 11% after getting the buzz.
What is Yuga Labs’ position on the investigation?
Yuga Labs, however, has already expressed its opinion. They contacted Bloomberg to reassure them that this is an investigation and will not necessarily lead to a lawsuit.
They also claimed regulators are constantly trying to learn more about Web3. Likewise, they said they want to partner with the rest of the industry and regulators to define and shape the burgeoning ecosystem.
Finally, they stated that, as space leaders, they will always collaborate with regulators to give them all the necessary answers.
This investigation could be related to the Scott+Scott law firm lawsuit. Scott+Scott announced in late June 2022 that it would take action against Yuga Labs. They claimed that the company sold millions of dollars in fraudulently promoted NFT.
According to the law firm, ApeCoin (APE) was another attempt to flee from investors. They asked investors to contact them if they suffered losses by acquiring these assets between April and June. The complaint has not yet been filed in court, and the company has not provided further details.
While an investigation does not always lead to legal action, the least the BAYC holders want is for the SEC to look where they are. On the one hand, there should be nothing to hide. On the other hand, the SEC is still unclear on the definition of digital assets.
This process may take months before getting a resolution. Hopefully, when it is time to settle, all parties will be happy with the outcome.
