Impact Theory CEO on Settling SEC's First-Ever NFT Enforcement Action

L A Media company, Impact Theory, recently settled with the SEC in the S ECs first enforcement action against an NFT project. Joining us now is Impact Theory, Ceo Tom Billie to discuss. Welcome to the show, Tom. Thank you very much for having me. Thanks for being here. Now. It, it sounds like you've had um an interesting couple of years dealing with the SCC talk to us about, about the engagement that you had with the agency. How did you end up at the settlement? Um So, yeah, they reached out to us and uh at first we're just doing like a, a friendly fact finding mission. Uh And then after a while, because to be honest, in the beginning, I thought it was just gonna go away. I felt that the way that we had handled it was very clear um that we weren't a security that we hadn't treated it that way. And then as we realized that was not going to be their stance, then we got into a more formal process. Uh And then, yeah, through that process, negotiating back and forth, came to a resolution that seemed best for our community and for the future of our project. And so, um yeah, felt very comfortable moving forward. OK. Uh You know, it's, it's rare that those who settle with, let's say adversarial institutions to a particular industry, um come and speak, uh you know, to, to news platforms. Uh It, it's, it's something that we really do appreciate. Uh what made you do it. Uh The honest answer is I don't feel like uh there's anything that I'm unwilling to talk about completely openly and transparently. I think the more people understand about how we ran our project, uh The more I think people will be very comfortable with this and hopefully everything that we've gone through uh helps paint the path forward for the entire industry and knowing that um in the review of our case, there were, there was a, a dissent statement made by two of the um people on the commission. And I think that they pose some really important questions and I certainly want uh people to start looking at that because for this industry to move forward confidently because I believe it's, it's an exciting new technology uh that makes I come from an entertainment perspective, but it makes an entirely new form of entertainment possible. And as somebody who really believes in that form of entertainment and wants to spend my life's work building that out, um I definitely want to see clarity come into this space. And if there's anything that I can do to help that along. I will happily do. Um So, but I'm also very confident in how I've handled myself through this whole thing. And so, yeah, I, I always view things through the lens of if I were alone on a stage with a microphone and people could ask me any question. Um Would I be confident in the decision I'm making? Knowing I will have to at one point stand up and answer why I did what I did. Uh So from that perspective, I'm perfectly happy to stand here and talk about uh what we've built, where we're going and what we think needs to happen to the industry so that people can really build with confidence. Tom this $6.1 million fine. Is that suggesting that you in somewhat agree with the S ECs allegations that you violated securities laws, they pointed to the communications of the project, you know, um uh maybe leading investors to believe that they could profit from the endeavors of your company. Is there, is there any part of the S ECs allegation that you agree with here? And is that what led you to pay this fine? Well, now this is where you're gonna get legal talk. So as you well know, this was a neither admit nor deny settlement, uh which was extremely important to me. And so we just ran the math of OK, if we were gonna fight this all the way. Um How am I gonna end out and we would have ended up spending roughly twice the amount of money that we were able to settle for. Because what I don't think many people know about our project is when we took the money in, when we sold, um, the tokens, we didn't spend any of that money. So we just set it aside and from my own personal investments into my company, we built what we were and are still building quite frankly. Um So we, once I realized like how financial the community was, which I will admit I did not expect. And that is the one thing I very much got caught off guard by that. Uh And so we launched at the very end of October and then in December, we offered a refund, a full refund. I paid the gas to send people their money back. And um very few people took us up on that. So it was probably less than 20% ballpark numbers. I don't remember the exact number, but roughly 20% of people took us up on it, which I was surprised, I thought it was gonna be more than that. And then as we're building and we go into a bear market, there's, you know, some spicy people in the discord and just wanting to further clean that out and get people that really understood what we were building from the beginning, which I did tell people, uh from the jump that if you're looking to make a trade. This is not the project for you. If you want something where you can hold it and holding it is awesome, then, then I'll make sense. But if you're just looking for a number to go up so that you can sell it, I'm not making those short term decisions. So, but we still had people that were there for the financial energy. So we did another refund. Um And that was August of 22 and that was called out in the dissenting um letter. So, you know, look again happy with the settlement. I made my decision there and moving forward. But I do think for the industry to pay attention to that, to look at that, to understand that the commission is not yet on the same page. I think it's gonna be very important for them to get on the same page. Um And to ask whether, you know, the moving forward, what's the right agency or framework to use to answer these questions? All right, Tom. Uh I, I wanna point to an interview we did yesterday. We had former head of policy at Coin Base in principle at her Wong dot XYZ on the show. Uh And she had this to say about the project. Let's take a look. This was much more of a scam. This is a scam that we've seen in a lot of different areas. What I love about the crypto industry is how sleuthing and self policing. It is. So this is one that was already uncovered by one of the crypto Twitter users. Zach X BT, I think, uh back in 2021. So part of us may be asking why did it take until 2023 for the SEC to do anything about it? But separately, what can an NFT project take away from this look? Don't be a scam. All right. Her was pointing to some of the scandal that the project has seen over the past year, Zac X Bt, of course, in 2021 said the project was similar to a pyramid scheme. How do you move forward from this? Yes. So this has been my stance from the beginning. And first, I would like to aggressively say that we definitely are not a scam. This is something that what we told people we were going to be building. What we're attempting to build is we're trying to build a media company in this new era. Like I said, I believe that the technology of the Blockchain allows for a completely new form of entertainment that we call borderless entertainment. Now, odds are stacked against any new company, especially when you're doing something different. So I could not guarantee that this was going to succeed. And that was a big part of the reason why I set the money aside because I was like, look, if this ends up failing, I'm just gonna refund people their money and, but we have built the first phases of what we said we were going to build. So we've spent the last almost two years now at this point, building out a new type of video game um that we're very excited is gonna be launching later this month. It launches in phases. So it's not, I mean, it takes 5 to 7 years to build a full blown video game, but in order to build something with the community, because a lot of what we're doing are actual community tools. So we see what we're building as a container and then other creators are gonna come in and start building within that. It's a trend. You're starting to see more and more in the industry if you know much about the Unreal Engine. Um Fortnite, what they're doing there is absolutely incredible similar i to some of the things that we're doing. Uh But we're obviously leveraging the Blockchain to get something um more deeply going. So look, I've been here in full view of the public um showing people what we're up to showing what we're building. So, all right, Tom, we are going to have to leave it there. Thanks for joining the show this morning. Thanks for having me. That was impact theory, CEO Tom Bill.