According to Blockworks, Flyfish Club reached a settlement with the U.S. Securities and Exchange Commission (SEC), requiring it to destroy all Flyfish NFTs by September 26, stop accepting royalty payments from secondary market trading platforms, and pay a fine of $750,000.

In 2021 and 2022, Flyfish sold memberships through NFTs at prices ranging from 2.5 ETH to 4.25 ETH, selling a total of approximately 1,600 NFTs and raising approximately $14.8 million to build Flyfish Club, a private restaurant in Manhattan.

The SEC said Flyfish led investors to expect to profit from its entrepreneurial and management expertise and told investors they could profit by reselling NFTs on the secondary market. Flyfish also told investors they could profit by renting their tokens to non-members.

The Flyfish Club is scheduled to open on September 20, and current NFT holders can still rent their tokens to others to gain access to the club. SEC Commissioners Hester Peirce and Mark Uyeda issued a dissent, arguing that these NFTs are utility tokens, not securities.