SEC Drops Yuga Labs Investigation After More Than 3 Years of Pursuit

Key Points:

• The U.S. SEC has closed its investigation into Yuga Labs, the creator of Bored Ape Yacht Club and CryptoPunks, without any charges or enforcement actions.
• The probe examined whether Yuga Labs’ NFTs and ApeCoin were securities, but its closure aligns with the SEC’s recent trend of easing scrutiny on crypto firms.

The U.S. Securities and Exchange Commission (SEC) has officially closed its investigation into Yuga Labs, the company behind the Bored Ape Yacht Club (BAYC) and CryptoPunks NFT collections.

The regulator confirmed it would not pursue any enforcement actions or charges against the firm.

SEC Closes Investigation into Yuga Labs Without Charges

Yuga Labs announced the development on March 3 through a social media post, calling the closure a victory for NFT creators.

The SEC initiated its investigation into Yuga Labs in October 2022 as part of a broader effort to regulate the crypto market. Under Chair Gary Gensler’s leadership, the agency has sought to apply existing securities laws to digital assets, arguing that many cryptocurrencies and NFTs exhibit characteristics of traditional securities.

The SEC had been examining whether Yuga Labs’ NFT offerings, including BAYC and related assets, constituted investment contracts under the Howey Test, which determines whether an asset qualifies as a security.

The probe into Yuga Labs was part of this regulatory push, particularly concerning fractional NFTs, which can be divided and traded like stocks. It also scrutinized the sale of ApeCoin (APE), a cryptocurrency associated with the BAYC ecosystem, to assess if it fell under securities regulations.

Bored Ape Yacht Club Sees Modest Price Movement

Following news of the investigation’s closure, the floor price of Bored Ape Yacht Club NFTs saw a slight increase to 13.75 ETH but remained down 0.7% for the day, according to CoinGecko data. The collection is still significantly below its peak value of 153.7 ETH in May 2022.

CryptoPunks NFT collection is only slightly up at 35.98 ETH despite trading volume down more than 33% in the past 24 hours, according to CoinGecko. Meanwhile, ApeCoin, which has declined nearly 19% over the past 24 hours, showed no significant price reaction to the news.

Regulatory Shift Signals Eased Scrutiny on Crypto and NFTs

Founded in 2021, Yuga Labs quickly became a dominant force in the NFT industry, reaching a $4 billion valuation after securing $450 million in funding by 2022. Its BAYC collection has generated billions in trading volume, cementing its position as a major player in the digital collectibles market.

The SEC’s decision to drop the case against Yuga Labs aligns with a recent shift toward a more lenient regulatory approach to the crypto industry.

Late last month, NFT marketplace OpenSea also revealed that the SEC had ended its investigation into the platform. This followed the regulator’s decision to drop its lawsuit against Coinbase, a major cryptocurrency exchange.

Additionally, the agency has recently closed investigations into Robinhood, Gemini, Uniswap Labs, and Consensys, while reaching a settlement with Kraken and moving toward a resolution with TRON founder Justin Sun.