NFT project Flyfish Club, LLC agreed to pay $750,000 as part of a settlement reached with the U.S. Securities and Exchange Commission on Monday.
The SEC said Flyfish conducted an “unregistered public offering of crypto asset securities,” selling 1,600 NFTs to U.S. investors, raising $14.8 million in the process. The purpose of the NFTs was to fund the construction of a high-end restaurant and bar called the “Flyfish Club” in New York City, the SEC said in a court filing Monday.
The SEC said owning a Flyfish NFT would be a way to become a member of the club, which could then be sold. According to the website, the restaurant is set to open this month.
“Flyfish convinced investors that Flyfish and its executives’ entrepreneurial and management expertise would generate revenue by building and operating restaurants,” the SEC said. “Flyfish also told investors that they could potentially make a profit by reselling the NFTs on the secondary market at high prices.”
Flyfish did not admit or deny the agency’s findings. The agency agreed to destroy all Flyfish NFTs under its control within the next 10 days and to forgo future royalties from NFT sales, in accordance with the SEC’s order. FlyFish did not immediately respond to a request for comment.
The SEC filed several lawsuits against NFT projects last year. The first NFT charge was filed against a podcast. studio shock theory And later Agency I sued Stoner Cats 2 LLC recently made history on the NFT marketplace for conducting an unregistered NFT offering that raised $8 million from investors. Open Sea The company said it received a Wells Notice from the SEC, meaning the agency intends to take enforcement action against it.
Republican commissioners Hester Pierce and Mark Uyeda said the SEC’s settlement “undermines confidence” in the agency. Both disagreed with the SEC’s assessment that Flyfish’s NFTs were securities, calling them “utility tokens” instead.
“While members can potentially monetize their tokens by renting or selling them, NFTs have a specific purpose: they are needed to dine at Flyfish Club.” wrote their writings dissent.
FlyFish NFTs are another way to sell memberships, Pierce and Ueda said.
“Experiments like Flyfish Club are not a threat to U.S. investors. Creative people should be able to experiment with NFTs without having to consult expensive tea leaf readers, uh-huhs, and lawyers,” they said. “The Commission could change the menu to include healthy guidelines to give non-security NFT creators more freedom to experiment.”
Disclaimer: The Block is an independent media outlet providing news, research and data. As of November 2023, Foresight Ventures is the largest investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information on the cryptocurrency industry. Below are the current financial disclosures.
© 2024 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be legal, tax, investment, financial or other advice.