Tag Archives: Ghaith Mahmood

SEC Targets NFTs as Securities for the First Time

by Ghaith Mahmood, Nima H. Mohebbi, Stephen P. Wink, Douglas K. Yatter, Adam Zuckerman, and Deric Behar

Top left to right: Ghaith Mahmood, Nima H. Mohebbi, and Stephen P. Wink.
Bottom left to right: Douglas K. Yatter, Adam Zuckerman, and Deric Behar.
(Photos courtesy of Latham & Watkins LLP)

In its first enforcement action involving NFTs, the SEC focused on issuer marketing that promises outsized returns on investment and platform building.

On August 28, 2023, the Securities and Exchange Commission (SEC) issued a cease-and-desist order (the Order) against a Los Angeles media and entertainment company (the Company) for an unregistered securities offering relating to its sale of $29.9 million worth of non-fungible tokens (NFTs)[1]. The company agreed to a settlement that includes disgorging $5 million, paying another $1 million in fees and penalties, and ceasing and desisting from violating the Securities Act of 1933. Notably, the settlement does not include fraud charges.

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