As a result of an upsurge in frauds, the Securities and Exchange Commission (SEC) of the United States has launched an inquiry.
The US Securities and Exchange Commission is examining NFT builders and marketplaces that operate in combination with securities violate conditions, led by SEC Chairman Gary Gensler.
The primary goal of the law enforcement action, according to Bloomberg, is to see if some non-fungible tokens (NFTs) are being used to fraudulently produce money in the same manner that ordinary stocks are.
Following a series of scandals involving stolen assets and attempted fraud on NFT markets, the SEC has launched an investigation.
According to Bloomberg, the SEC’s enforcement division has issued subpoenas in recent months seeking information on NFT issuance.
On February 2022, a phishing attempt on OpenSea (the world’s first and largest peer-to-peer marketplace for crypto collectibles, such as video games, digital art, and other blockchain-backed virtual products) users resulted in the theft of $1.7 million in NFTs.
According to the study, hackers took advantage of the Wyvern Protocol’s flexibility, which supports the majority of NFT smart contracts, and stole 254 NFTs, including some of the most valuable on the market, such as Bored Ape Yacht Club and Decentraland NFTs.
Because NFTs are growing more lucrative, hackers are increasingly targeting well-known platforms.
Despite its great potential, the NFT is now beset by issues such as technology limitations, financial difficulties, and, most critically, a legal framework.
No country has yet enacted regulations governing this asset class.
Some governments and countries, including as the US, the UK, Japan, Singapore, and Hong Kong, established first legislation that just specified security tokens rather than the entire NFT business.
Many US government agencies are monitoring digital assets, but only in specific areas such as banking, commodities trades, or taxation, and have yet to develop a comprehensive set of management guidelines.
As a result of regulatory ambiguity, early NFT market players are at the greatest risk.
Additional clarifications from the SEC have yet to be offered.
The Securities and Exchange Commission (SEC) of the United States is an independent federal body established in the aftermath of the 1929 Wall Street Crash. The SEC’s main goal is to ensure that the legislation against market manipulation is followed.
The SEC’s mission is divided into three parts: protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.
President Franklin D. Roosevelt chose Joseph P. Kennedy, a self-made multimillionaire, financier, and leader in the Irish-American society, as the first chairman of the Securities and Exchange Commission (SEC) in 1934.