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SEC targets NFT creators over potential securities violations By BTC Peers


SEC targets NFT-creators over possible securities violations

The US Securities and Exchange Commission is seeking to increase its oversight of the NFT market. According to reports, Chairman Gary Gensler (crypto-skeptical) is heading the probe into NFT market creators and markets for securities violations.

According to a Bloomberg report citing anonymous sources, the SEC is investigating whether “certain nonfungible tokens… are being utilized to raise money like traditional securities.”

Over the last few months, attorneys from the agency’s enforcement unit have sent subpoenas to some NFT projects. In particular, the Commission is going to examine how fractional NFTs were used.

Fractionalization is the process of selling small amounts of a valued NFT. CryptoPunk, for instance, currently sells at over $200,000. It is not affordable for most small investors. A CryptoPunk can be owned by regular investors through fractional NFTs.

It is surprising that the news doesn’t surprise anyone. Hester Peirce, also known as Crypto Mom, suggested back in March that the sale of fractionalized NFTs may be grey. Her comments were as follows:

You better be careful that you’re not creating something that’s an investment product — that is a security.

SEC has tried to tighten its regulatory oversight of the cryptocurrency market. For failing to register operations, a number of cryptocurrency exchanges have had to pay penalties. The US regulatory authorities reached a consensus in December that the SEC should be leading efforts to regulate stablecoins.

The NFT market saw a record January, but there were a few declines in NFT searches and sales volume.

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