The Securities and Exchange Commission (SEC) is investigating Yuga Labs over whether its Bored Ape Yacht Club non-fungible token (NFT) collection and the ApeCoin (APE) token are unregistered securities, according to a report published by Bloomberg.
The report says that the SEC is exploring whether Yuga Labs broke the law by issuing Bored Ape NFTs, which, according to the agency, act similarly to stocks. Yuga Labs confirmed the investigation to Bloomberg.
“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. As a leader in the space, Yuga is committed to fully cooperating with any inquiries along the way,” Yuga Labs spokesperson said.
The SEC is also looking closely at the distribution of ApeCoin – the Ethereum-based governance token used in the APE ecosystem – that launched this March.
The token was airdropped to holders of Bored Ape Yacht Club, Mutant Ape Yacht Club, and Bored Ape Kennel Club – spinoffs of the original project – members, the founders, and other entities.
However, the APE token was officially created and launched by the Ape Foundation, which Yuga Labs claims to be only a part of. This approach was chosen precisely due to regulatory concerns, since incentivizing members to hold NFTs to get benefits can resemble investment contracts.
APE crashed 10% following the news. It is trading at $4.71 at the time of writing or 88%, down from its all-time high of $39.40, according to CoinMarketCap.
