The U.S. Securities and Exchange Commission (SEC) has charged Flyfish Club with conducting an unregistered crypto asset securities offering through non-fungible tokens (NFTs), raising $14.8 million for an exclusive restaurant project. The regulator noted that “Flyfish has agreed to a cease and desist order, paid a $750,000 civil penalty, and complied with certain covenants.”
SEC Charges Flyfish Club with Unregistered Cryptocurrency Offering
The U.S. Securities and Exchange Commission (SEC) announced on Monday that it has charged Flyfish Club LLC with “conducting an unregistered offering of crypto-asset securities in the form of non-fungible tokens (NFTs) that raised approximately $14.8 million from investors to fund the construction and launch of a private members-only restaurant called Flyfish Club.”
The SEC details:
Flyfish has offered and sold approximately 1,600 Flyfish NFTs to investors. According to the order, Flyfish NFTs will be the exclusive means of obtaining membership in the club.
“This order finds that during the offering, Flyfish engaged in significant marketing efforts to promote NFTs as investments and to cause investors to expect returns from Flyfish’s efforts,” the regulator added.
The SEC order also notes that Flyfish incentivized investors by suggesting potential profits through reselling their NFTs or renting them out as part of a “passive income strategy.” The order reveals that 42% of investors purchased more than one NFT, even though only one NFT was required for membership access.
The SEC charged Flyfish with violating Sections 5(a) and 5(c) of the Securities Act of 1933, as the offering was not registered or exempt from registration. The regulator noted:
Without admitting or denying the SEC’s findings, Flyfish agreed to a cease-and-desist order, paid a $750,000 civil penalty, and complied with certain covenants.
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