On Aug. 28, 2023, the Securities and Exchange Commission (Commission) charged Impact Theory, LLC, a media and entertainment company, with violating Sections 5(a) and 5(c) of the Securities Act of 1933. These allegations stem from the alleged sale of around $29.9 million worth of crypto assets in the form of non-fungible tokens referred to as Founder’s Keys (KeyNFTs), which were offered without proper registration or exemption. The Commission argued that the marketing of KeyNFTs, coupled with implicit promises of future profits tied to Impact Theory’s managerial and entrepreneurial efforts, fell within the criteria of an investment contract under the Howey test, SEC v. W.J. Howey Co., 328 U.S. 293 (1946), and were thus considered securities. In response, Impact Theory agreed to a cease-and-desist order, acknowledging its failure to comply with registration requirements, and was ordered to pay disgorgement of more than $5 million.