ApeCoin slumps after SEC probe revelation
US Securities and Exchange Commission questions whether NFTs are securities
ApeCoin slipped on Wednesday after reports that the US Securities and Exchange Commission (SEC) has started a probe into Yuga Labs, the creator of the Bored Ape Yacht Club non-fungible token (NFT) collection.
A report from Bloomberg citing a source “familiar with the matter” said that the SEC, the leading financial regulator in the United States, is investigating whether the sale of certain digital assets violates federal laws and whether certain NFTs are “more akin to stocks”.
The central legal question at the centre of the investigation is reportedly whether NFTs constitute securities. Reports first emerged in March that SEC was examining NFT creators and marketplaces.
The regulator is thought to be paying particular attention to the distribution of ApeCoins, the Ethereum-based governance and utility tokens used within the APE ecosystem, to holders of Bored Ape Club, Bored Ape Kennel Club and Mutant Ape Yacht Club members.
The APE Foundation and the ApeCoin decentralised autonomous organisation (DAO) were launched in March. The ApeCoin community received 62% of the fixed one billion supply of ApeCoins, including 15% airdropped to existing NFT holders.
Further percentages of tokens were allocated to Yuga Labs, the four founders of Bored Ape Yacht Club, launch contributors, and the Jane Goodall Legacy Foundation.
Yuga Labs pledges to cooperate with SEC probe
A Yuga Labs spokesperson confirmed that the company was cooperating with the SEC's probe, saying: “It’s well-known that policymakers and regulators have sought to learn more about the novel world of Web 3.0. We hope to partner with the rest of the industry and regulators to define and shape the burgeoning ecosystem. As a leader in the space, Yuga is committed to fully cooperating with any inquiries along the way.”
At 9:45 am BST (+1 UTC) on 13 October ApeCoin traded at $4.40, down by 6.42% on the previous day, and 89% below the $39.40 all-time high that it reached in March.