Flyfish Club Settles with SEC, to Pay $750,000 in Penalties for NFT Securities Violations
CryptoNewsTerminal Staff16 Sep, 2024
Flyfish Club Settles with SEC, to Pay $750,000 in Penalties for NFT Securities Violations
Flyfish Club Settles with SEC Over NFT Securities Violations The SEC alleged that Flyfish Club's marketing materials emphasized the potential for profits from the restaurants' sales of food and drinks, which led investors to believe they were purchasing a security. However, the NFTs did not provide any ownership interest in the club or its profits, and their value was solely based on speculation. As part of the settlement, Flyfish Club will pay a $750,000 penalty, forfeit all of its Flyfish NFTs by Sept. 26, 2023, and cease paying royalties through secondary market platforms for the sale of its NFTs. The club must also provide a full accounting of all funds raised and expenses incurred in connection with the sale of the NFTs. The Flyfish Club is the latest in a series of NFT projects to face regulatory scrutiny. The SEC has been cracking down on companies that sell NFTs that meet the definition of a security, even if they are not marketed as such. This case is a reminder that companies that sell NFTs must be careful to comply with all applicable securities laws.
