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SEC issues first NFT, entrepreneur Tom Bilyeu settles for $6 million

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SEC issues first NFT, entrepreneur Tom Bilyeu settles for $6 million

Famous entrepreneur Tom Bilyeu made $30 million by issuing NFT "Founder's Keys" through his media program Impact Theory, and is now fined $6 million by the SEC.

SEC's First NFT Enforcement Case

According to the complaint, the SEC has charged Los Angeles-based media entertainment company Impact Theory, LLC for issuing unregistered NFT assets and raising approximately $30 million from investors across various U.S. states.

Impact Theory issued and sold three levels of NFTs named "Founder's Keys" between October and December 2021, with Legendary, Hero, and Badass as the three tiers.

The main issue lies in the SEC's assertion that Impact Theory's sales pitch created an expectation of profit for investors. The SEC pointed out:

Impact Theory encouraged investors to see the purchase of "Founder's Keys" as an investment in the company, with potential profits if the company succeeds. Impact Theory also emphasized that they were trying to build the next Disney, which could bring immense value to NFT holders if successful.

As a result, the SEC deemed the sale of "Founder's Keys" as investment contracts, with NFTs classified as securities.

What Are Founder's Keys Exactly For?

According to the official website, Impact Theory is a media company focused on creating positive, inspiring, and impactful content, aiming to motivate users to pursue a positive and successful life through videos, interviews, etc.

Founder's Keys unlock corresponding levels of advanced content, participation in Impact Theory University courses, the opportunity to speak with the company's founders Tom Bilyeu and Lisa Bilyeu, as well as attendance at thrice-annual secret dinners.

Tom Bilyeu is a renowned entrepreneur with a YouTube channel boasting 3.74 million subscribers, featuring content on self-improvement, life philosophy, and entrepreneurship interviews.

Impact Theory Settles for $6.1 Million

The SEC stated that the total amount Impact Theory must pay exceeds $6.1 million, including illegal profits, prejudgment interest, and civil penalties. The follow-up actions include:

  1. Agreeing to destroy all Founder's Keys NFTs

  2. Canceling all secondary market royalties for Founder's Keys

  3. Establishing a Fair Fund to return investors' NFT purchase costs

In reality, Impact Theory sold at least 13,921 NFTs, earning $29.89 million worth of Ether and approximately $978,000 in royalties on the secondary market.

In a tweet, Tom Bilyeu expressed disappointment at the SEC's view on digital assets from a securities law perspective but was pleased to settle with the SEC and conclude the investigation.

He will address related questions in the Discord channel.

ZachXBT: Packaged as a Ponzi Scheme for Personal Growth

Previously, online sleuth ZachXBT criticized Impact Theory as a Ponzi scheme built on people's aspirations for personal growth.

Now, facing an SEC lawsuit, ZachXBT reflects on his initial predictions.