SEC launches probe into ‘Bored Ape’ NFTs and the company that makes them

While the crypto bros are losing their shirts over those monkey jpegs they dreamed were worth $300,000, the Securities and Exchange Commission is opening an investigation into these NFTs’ creator, Yuga Labs.

A fun thing to do is wonder how much money people have lost if they bought the hype and invested real money in cryptocurrency when they saw all those Super Bowl crypto ads in February. Some actually track it, or something quite similar. The editor of the sarcastically named blog Web 3 Is Going Great has been tracking the value of these things since the New York Times ran the somewhat derided “Latecomer’s Guide to Crypto” (published a month after the Super Bowl). And by the end of September, you’ve lost 55% of your money if you invested in Bitcoin and/or Ethereum when that bit ran.

Another thing that happened shortly after the Super Bowl was the emergence of “Bored Ape” NFT murals in the Mission District. These NFTs (non-fungible tokens, and no, I won’t explain these here) are the creation of a Miami-based company/collective called Yuga Labs, which is probably the biggest fish in the floundering NFT market. And on Tuesday, Bloomberg reported that Yuga Labs is under investigation by the US Securities and Exchange Commission.

Bloomberg’s report is based on information from an anonymous source, so we don’t know why Yuga Labs is being investigated. They cannot be charged or found guilty of any wrongdoing. But we do know that new SEC Commissioner Gary Gensler is committed to holding cryptocurrency and NFTs to the same regulatory standards as legitimate investments. He told the New York Times last month that crypto and NFTs “have functions similar to and potentially compete with money market funds, other securities and bank deposits,” and as such should have the same disclosure requirements, so people know that their Investments is not an anonymous scam prepared by scammers or 14-year-olds.

Yuga Labs said in a statement to Fortune that “It is well known that policymakers and regulators have sought to learn more about the new world of Web3,” and that “We hope to work with the rest of the industry and regulators to define and shape the emerging ecosystem . As a leader in the space, Yuga is committed to fully cooperating with all inquiries along the way.”

But this could be a sign that the “Anything Goes” days are over for these highly touted but highly questionable Web3 properties. Last week, Kim Kardashian was fined $1.26 million for her promotional role in a pump-and-dump cryptocurrency scheme, with Gary Gensler’s SEC issuing that fine. So it could be a turning point for the crypto community, and a turning point for the rest of us as well. Because a regulation and prosecution could lead to a whole lot of threatening cryptocurrency and NFT media coverage that we would actually enjoy reading.

Related: Crypto Enthusiasts Promote ‘Bored Ape’ NFTs in Mission District Murals [SFist]

Photo: Joe Kukura, SFist