The United States Securities and Exchange Commission is yet to soften its harsh stance against unregistered securities in the non-fungible token market. In yet another incident, the regulatory commission has fined Flyfish Club, a restaurant based in New York, nearly $1 million for offering unregistered, non-fungible token collections to United States crypto investors.
Flyfish Fined $750K For Trading Unregistered NFTs
In a September 17 site publication, the United States Securities and Exchange Commission confirmed that it has settled with Flyfish Club, which it previously accused of selling illegal securities to United States customers. As part of the settlement, Flyfish Club’s non-fungible token project has agreed to pay $750,000.
NFT project Flyfish Club reached a settlement with the US SEC for unregistered issuance of crypto asset securities and paid a fine of $750k. Flyfish Club agreed to destroy all NFTs and no longer accept related royalties. The restaurant raised $14.8 million by selling 1,600 NFTs…
— Wu Blockchain (@WuBlockchain) September 17, 2024
Flyfish is a curated members-only club and restaurant in New York, United States, offering elevated dining and social experiences. This five-star restaurant is backed by several prominent investors, including Gary Vaynerchuk, among others. The restaurant previously launched a non-fungible token collection, giving members exclusive access to the restaurant, cocktail lounge, upscale restaurant, intimate omakase room, and an outdoor space.
In its findings, the United States SEC had maintained that the Flyfish Club offered unregistered crypto asset securities” when it sold 1,600 NFTs to U.S. investors, making $14.8 million. Flyfish Club anticipated using the raised funds from NFT selling to upgrade its facility. But, after a close consideration, the regulatory commission insisted:
“Flyfish Club led investors to expect profits from the entrepreneurial and managerial expertise of Flyfish and its principals in building and running the restaurant. Flyfish Club told investors they could potentially profit from reselling their NFTs at appreciated prices in the secondary market.”
In the meantime, the Flyfish Club has not admitted or denied the accusations. In return, the club has agreed to pay $750,000 for the settlement. Moreover, the entity has agreed to destroy all Flyfish NFTs that are still under its control within the next 10 days and halt future royalties from the sales of these NFTs. Flyfish NFT collection featured a limited edition of 2,072 NFTs hosted on the Ethereum blockchain network.
Previous Legal Fights Between The SEC And NFT Projects
This is not the first time the United States Securities and Exchange Commission has prosecuted unregistered NFT projects. Last year, the regulatory commission charged the Stoner Cats NFT project and its parent company with offering unregistered NFTs, raising over $8 million from United States investors. Fast-forward to 2024, the commission recently issued a well notice to the OpenSea NFT marketplace, claiming that the majority of NFTs on its platform are unregistered securities.
OpenSea has received a Wells notice from the SEC threatening to sue us because they believe NFTs on our platform are securities.
We're shocked the SEC would make such a sweeping move against creators and artists. But we're ready to stand up and fight.
Cryptocurrencies have long…
— Devin Finzer (dfinzer.eth) (@dfinzer) August 28, 2024
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