In re Impact Theory

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES ACT OF 1933 
Release No. 11226 / August 28, 2023 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21585 
 
 
In the Matter of 
 
Impact Theory, LLC 
 
Respondent. 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 8A OF THE SECURITIES ACT 
OF 1933, MAKING FINDINGS, AND 
IMPOSING A CEASE-AND-DESIST 
ORDER 
  
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 
of 1933 (“Securities Act”), against Impact Theory, LLC (“Impact Theory” or “Respondent”). 
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over Respondent and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and 
Imposing a Cease-and-Desist Order (“Order”), as set forth below. 
 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
 
 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other 
person or entity in this or any other proceeding. 
 
 

 2 
Summary 
 
1. From October 13, 2021 to December 6, 2021, Impact Theory, a media and 
entertainment company, offered and sold crypto asset securities known as Founder’s Keys 
(“KeyNFTs”) in the form of purported non-fungible tokens (“NFTs”), raising approximately $29.9 
million worth of ether (“ETH”) from at least hundreds of investors, including investors across the 
United States.  In advance of the offering, Impact Theory publicly stated that it would deliver 
“tremendous value” to KeyNFT purchasers.  Impact Theory also stated that it would use the 
offering proceeds for “development,” “bringing on more team,” and “creating more projects.”  
Consistent with the foregoing, Impact Theory collected the proceeds from the KeyNFT sales in a 
single crypto asset wallet and used a portion of those proceeds to pay certain vendors providing 
services related to Impact Theory’s business. 
 
2. Based on the facts and circumstances set forth below, KeyNFTs were offered and 
sold as investment contracts, and therefore securities, pursuant to the test laid out in SEC v. W.J. 
Howey Co., 328 U.S. 293 (1946) and its progeny, including the cases referenced by the 
Commission in its Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act 
of 1934: The DAO (Exchange Act Rel. No. 81207) (July 25, 2017).  Purchasers in the KeyNFT 
offering had a reasonable expectation of obtaining a future profit based on Impact Theory’s 
managerial and entrepreneurial efforts.  Impact Theory violated Sections 5(a) and 5(c) of the 
Securities Act by offering and selling these securities without having a registration statement filed 
or in effect with the Commission or qualifying for an exemption from registration. 
 
Respondent 
 
3. Impact Theory is a Delaware limited liability company with its principal place of 
business in Los Angeles, California.  Neither Impact Theory nor its securities have ever been 
registered with the Commission in any capacity. 
 
Facts 
 
4. From October 13, 2021 to December 6, 2021, Impact Theory offered and sold 
crypto asset securities known as Founder’s Keys to the public in the form of purported NFTs (the 
“Offering”).  The KeyNFTs were offered and sold at three tiers (which Impact Theory called 
“Legendary,” “Heroic,” and “Relentless”) and priced as follows: (i) 1.5 to 3 ETH per token for the 
Legendary tier; (ii) 0.75 to 1.5 ETH per token for the Heroic tier; and (iii) 0.05 to 0.1 ETH per 
token for the Relentless tier.  Each KeyNFT contains a digital graphic that features a combination 
of four (out of 50 possible) symbols, as shown in the representative examples below. 
 
                   

 3 
5. In advance of the Offering, Impact Theory hosted several live speaking events on 
Discord (a voice, video, and text communication service), posted recordings of those events on the 
company’s Discord channels for the public to view, and shared information on Impact Theory’s 
websites and social media channels.  Impact Theory also posted recordings of additional speaking 
events on YouTube and participated in public interviews on news and social media promoting the 
KeyNFTs. 
 
6. Through those events and public statements, Impact Theory invited potential 
investors to view the purchase of a KeyNFT as an investment into the business, stating that 
investors would profit from their purchases if Impact Theory was successful in its efforts.  Among 
other things, Impact Theory emphasized that the company was “trying to build the next Disney,” 
and, if successful, it would deliver “tremendous value” to KeyNFT purchasers, and that the future 
value of the KeyNFTs would be significantly greater than their purchase price.  For example, 
Impact Theory stated: 
 
A. “If you’re paying 1.5 [ETH], you’re going to get some massive amount 
more than that.  So no one is going to walk away saying, ‘Oh man, I don’t think I got value here.’  
I’m freakishly bullish on that.  I will do whatever it takes to make sure that that is true.” 
 
B. “The project itself is called the Impact Theory Founder’s Key and we like to 
say that it unlocks the future of everything that we’re doing as a company. . . . As I really looked at 
the [NFT] technology, I realized what it allows you to do is reward your community.  And for 
somebody like me who’s trying to build the next Disney, what you need is a thriving community.  
And so we saw this as a tremendous way for our community to capture tremendous value from the 
things that we’re building.” 
 
C. “Now as we’re building out this IP, imagine that you could’ve gotten in on 
Disney when they were doing Steamboat Willie, and that’s how we think of the Legendary tier.  
That’s how we think of this whole first drop quite frankly.” 
 
7. Impact Theory also underscored that this purported value would be derived from 
the company’s efforts, and that Impact Theory would use the proceeds from the Offering for 
“development,” “bringing on more team,” and “creating more projects.”  For example, Impact 
Theory stated: 
 
A. “But yeah, I will make sure that we do something that by any reasonable 
standard, people got a crushing, hilarious amount of value.” 
 
B. “The key takeaway that I want you to have is that there is a lot of cool 
things coming in the next 18 to 24 months.  And that is ultimately a tiny fraction of the things that 
will be coming in the next five years.  The reason that we’re only selling on the next 18-to-24 
month hype is I want you guys to be able to capture 90 percent of the economic value of all the big 
things that we will do in the coming years beyond that.  And the only way to do that is to only sell 
and set the price based on the things that we’re doing in the short term, and that will leave the 
upside to be largely captured by you guys.” 

 4 
  
C. “We’re going to be investing that money into development, into bringing on 
more team, creating more projects, making sure that we’re delivering just an obscene amount of 
value.  Until people are giggling thinking that they can’t believe that they paid – you know – 
whichever tier they come in on and are getting all this value – until that’s the sentiment – we will 
just keep stocking it with value.” 
 
8. In addition, Impact Theory publicly shared its view that the fortunes of KeyNFT 
purchasers, Impact Theory, and Impact Theory’s founders were all linked together.  For example, 
Impact Theory stated: 
 
A. “Our goal is to make sure that as Impact Theory is enriched, as [its 
founders] are enriched, as our team here at Impact Theory is enriched, that you guys also are 
enriched.  And so that is why we are so aggressively behind NFTs.” 
 
B. “NFTs are the mechanism by which communities will be able to capture 
economic value from the growth of the company that they support.” 
 
9. Given these statements, numerous prospective and actual purchasers of KeyNFTs 
stated on Impact Theory’s Discord channels that they viewed KeyNFTs as investments into the 
company and understood Impact Theory’s statements to mean that the company’s development of 
its projects could translate to appreciation of the KeyNFTs’ value over time.  For example, 
prospective and actual purchasers stated: 
 
A. “This is like being offered to invest in a booming company when they’re 
Series A.” 
 
B. “Its like investing 10k with a 300k upside, for a small risk.” 
 
C. “Everyone here is an early adopter!  Buying a founders key is Like 
investing in Disney, Call of Duty, and YouTube all at once.” 
 
D. “[T]here is at this point in time no investment that has such an amazing Risk 
to Reward Ratio.  You are not investing in some key or PNG, you are investing in [the Impact 
Theory] team and regarding this is an opportunity that has never been there its like handing 20$ to 
Mark Zuckerberg in his dorm room.” 
 
10. In total, Impact Theory sold 13,921 KeyNFTs to at least hundreds of investors, 
including investors in multiple states.  In so doing, Impact Theory raised $29,896,237.16 worth of 
ETH, calculated based on the average of the open and close price of ETH in U.S. dollars on the 
day of each KeyNFT sale.  Impact Theory collected the proceeds from the KeyNFT sales in a 
single crypto asset wallet and used a portion of those proceeds to pay certain vendors providing 
services related to Impact Theory’s business. 
 

 5 
11. After the Offering commenced on October 13, 2021, the KeyNFTs also began 
trading on various secondary market crypto asset trading platforms.  Impact Theory stated on its 
websites and social media channels that KeyNFTs could be purchased and sold on two such 
secondary market platforms.  Impact Theory programmed the smart contract for the KeyNFTs so 
that the company received a 10% “royalty” on each secondary market sale.  Secondary market 
sales of KeyNFTs generated approximately $978,000 worth of ETH in royalties for Impact Theory 
between October 13, 2021 and July 20, 2023. 
 
Impact Theory’s Offer and Sale of Securities Was Not Registered 
 
12. Impact Theory’s offer and sale of KeyNFTs was not registered with the 
Commission, nor did Impact Theory’s offer and sale of KeyNFTs satisfy any exemption from 
registration. 
 
Violations 
 
13. As a result of the conduct described above, Impact Theory violated Section 5(a) of 
the Securities Act, which states that “[u]nless a registration statement is in effect as to a security, it 
shall be unlawful for any person, directly or indirectly—(1) to make use of any means or 
instruments of transportation or communication in interstate commerce or of the mails to sell such 
security through the use or medium of any prospectus or otherwise; or (2) to carry or cause to be 
carried through the mails or in interstate commerce, by any means or instruments of transportation, 
any such security for the purpose of sale or for delivery after sale.” 
 
14. Also as a result of the conduct described above, Impact Theory violated Section 
5(c) of the Securities Act, which states in relevant part that “[i]t shall be unlawful for any person, 
directly or indirectly, to make use of any means or instruments of transportation or communication 
in interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of 
any prospectus or otherwise any security, unless a registration statement has been filed as to such 
security.” 
 
Disgorgement and Civil Penalties 
 
15. The disgorgement and prejudgment interest ordered in Section IV, paragraph D is 
consistent with equitable principles, does not exceed Respondent’s net profits from its violations, 
and will be distributed to harmed investors to the extent feasible.  The Commission will hold 
funds paid pursuant to Section IV, paragraph D in an account at the United States Treasury 
pending distribution.  Upon approval of the distribution final accounting by the Commission, any 
amounts remaining that are infeasible to return to investors, and any amounts returned to the 
Commission in the future that are infeasible to return to investors, may be transferred to the 
general fund of the United States Treasury, subject to Section 21F(g)(3) of the Securities 
Exchange Act of 1934. 
 

 6 
Impact Theory’s Remedial Efforts 
 
16. In determining to accept the Offer, the Commission considered remedial acts 
undertaken by Respondent.  Specifically, Impact Theory instituted repurchase programs in 
December 2021 and August 2022, whereby the company offered to buy back KeyNFTs purchased 
in the Offering or on the secondary market.  In total, Impact Theory repurchased 2,936 KeyNFTs, 
returning approximately $7.7 million worth of ETH to investors. 
 
Undertakings 
 
17. Respondent has undertaken to: 
 
A. Destroy all KeyNFTs in its possession or control within 10 days of the date 
of this Order. 
 
B. Publish notice of this Order on Impact Theory’s websites and social media 
channels, in a form not unacceptable to the Commission staff, within 10 days of the date of the 
Order. 
 
C. Revise the smart contract(s) or any other programming code(s) or computer 
protocol(s) underlying the KeyNFTs to eliminate any royalty that Impact Theory might otherwise 
receive from any future secondary market transactions in KeyNFTs, within 10 days of the date of 
this Order. 
 
D. Certify, in writing, compliance with the undertakings set forth above.  The 
certification shall identify the undertakings, provide written evidence of compliance in the form of 
a narrative, and be supported by exhibits sufficient to demonstrate compliance.  The 
Commission staff may make reasonable requests for further evidence of compliance, and 
Respondent agrees to provide such evidence.  The certification and supporting material shall be 
submitted to Judith A. Weinstock, Assistant Regional Director, Division of Enforcement, with a 
copy to the Office of Chief Counsel of the Enforcement Division, no later than sixty (60) days 
from the date of the completion of the undertakings. 
 
E. Assist the Commission staff in the administration of a distribution plan, 
including any and all efforts to distribute to affected investors the monetary relief described in 
Section IV, paragraph D below, including, without limitation, promptly publishing on Impact 
Theory’s websites and social media channels, upon request by the Commission staff, notice of a 
distribution and/or claims process, in a form not unacceptable to the Commission staff.  
 
F. Respondent may apply to the Commission staff for an extension of the 
deadlines set forth above before their expiration and, upon a showing of good cause by 
Respondent, the Commission staff may, in its sole discretion, grant such extensions for whatever 
time period it deems appropriate.    
 

 7 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Respondent Impact Theory’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 8A of the Securities Act, Respondent Impact Theory cease and 
desist from committing or causing any violations and any future violations of Sections 5(a) and 5(c) 
of the Securities Act. 
 
 B. Respondent shall comply with the undertakings enumerated in paragraph 17 above.  
 
C. Respondent shall, within 15 days of the entry of this Order, pay disgorgement of 
$5,120,718.27, prejudgment interest of $483,195.90, and a civil money penalty of $500,000 to the 
Securities and Exchange Commission.  If timely payment of disgorgement and prejudgment 
interest is not made, additional interest shall accrue pursuant to SEC Rule of Practice 600.  If 
timely payment of the civil money penalty is not made, additional interest shall accrue pursuant to 
31 U.S.C. § 3717. 
 
D. Payment must be made in one of the following ways: 
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request; 
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to: 
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
Impact Theory as a Respondent in these proceedings, and the file number of these proceedings; a 
copy of the cover letter and check or money order must be sent to Sheldon L. Pollock, Associate 
Regional Director, Division of Enforcement, Securities and Exchange Commission, New York 
Regional Office, 100 Pearl Street, Suite 20-100, New York, NY 10004-2616. 
 

 8 
 E. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is created 
for the disgorgement, prejudgment interest, and civil money penalties referenced in paragraph D 
above.  Amounts ordered to be paid as civil money penalties pursuant to this Order shall be treated 
as penalties paid to the government for all purposes, including all tax purposes.  To preserve the 
deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, it shall 
not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of 
compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in 
this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a Penalty 
Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting the 
Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty 
Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed an 
additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed 
in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a private 
damages action brought against Respondent by or on behalf of one or more investors based on 
substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
Secretary 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES ACT OF 1933 

Release No. 11226 / August 28, 2023 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-21585 

 

 

In the Matter of 

 

Impact Theory, LLC 

 

Respondent. 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933, MAKING FINDINGS, AND 

IMPOSING A CEASE-AND-DESIST 

ORDER 

  

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 

of 1933 (“Securities Act”), against Impact Theory, LLC (“Impact Theory” or “Respondent”). 

 

II. 

 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over Respondent and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and 

Imposing a Cease-and-Desist Order (“Order”), as set forth below. 

 

III. 

 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

 

 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other 

person or entity in this or any other proceeding. 
 

 



 2 

Summary 

 

1. From October 13, 2021 to December 6, 2021, Impact Theory, a media and 

entertainment company, offered and sold crypto asset securities known as Founder’s Keys 

(“KeyNFTs”) in the form of purported non-fungible tokens (“NFTs”), raising approximately $29.9 

million worth of ether (“ETH”) from at least hundreds of investors, including investors across the 

United States.  In advance of the offering, Impact Theory publicly stated that it would deliver 

“tremendous value” to KeyNFT purchasers.  Impact Theory also stated that it would use the 

offering proceeds for “development,” “bringing on more team,” and “creating more projects.”  

Consistent with the foregoing, Impact Theory collected the proceeds from the KeyNFT sales in a 

single crypto asset wallet and used a portion of those proceeds to pay certain vendors providing 

services related to Impact Theory’s business. 

 

2. Based on the facts and circumstances set forth below, KeyNFTs were offered and 

sold as investment contracts, and therefore securities, pursuant to the test laid out in SEC v. W.J. 

Howey Co., 328 U.S. 293 (1946) and its progeny, including the cases referenced by the 

Commission in its Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act 

of 1934: The DAO (Exchange Act Rel. No. 81207) (July 25, 2017).  Purchasers in the KeyNFT 

offering had a reasonable expectation of obtaining a future profit based on Impact Theory’s 

managerial and entrepreneurial efforts.  Impact Theory violated Sections 5(a) and 5(c) of the 

Securities Act by offering and selling these securities without having a registration statement filed 

or in effect with the Commission or qualifying for an exemption from registration. 

 

Respondent 

 

3. Impact Theory is a Delaware limited liability company with its principal place of 

business in Los Angeles, California.  Neither Impact Theory nor its securities have ever been 

registered with the Commission in any capacity. 

 

Facts 

 

4. From October 13, 2021 to December 6, 2021, Impact Theory offered and sold 

crypto asset securities known as Founder’s Keys to the public in the form of purported NFTs (the 

“Offering”).  The KeyNFTs were offered and sold at three tiers (which Impact Theory called 

“Legendary,” “Heroic,” and “Relentless”) and priced as follows: (i) 1.5 to 3 ETH per token for the 

Legendary tier; (ii) 0.75 to 1.5 ETH per token for the Heroic tier; and (iii) 0.05 to 0.1 ETH per 

token for the Relentless tier.  Each KeyNFT contains a digital graphic that features a combination 

of four (out of 50 possible) symbols, as shown in the representative examples below. 

 

                   



 3 

5. In advance of the Offering, Impact Theory hosted several live speaking events on 

Discord (a voice, video, and text communication service), posted recordings of those events on the 

company’s Discord channels for the public to view, and shared information on Impact Theory’s 

websites and social media channels.  Impact Theory also posted recordings of additional speaking 

events on YouTube and participated in public interviews on news and social media promoting the 

KeyNFTs. 

 

6. Through those events and public statements, Impact Theory invited potential 

investors to view the purchase of a KeyNFT as an investment into the business, stating that 

investors would profit from their purchases if Impact Theory was successful in its efforts.  Among 

other things, Impact Theory emphasized that the company was “trying to build the next Disney,” 

and, if successful, it would deliver “tremendous value” to KeyNFT purchasers, and that the future 

value of the KeyNFTs would be significantly greater than their purchase price.  For example, 

Impact Theory stated: 

 

A. “If you’re paying 1.5 [ETH], you’re going to get some massive amount 

more than that.  So no one is going to walk away saying, ‘Oh man, I don’t think I got value here.’  

I’m freakishly bullish on that.  I will do whatever it takes to make sure that that is true.” 

 

B. “The project itself is called the Impact Theory Founder’s Key and we like to 

say that it unlocks the future of everything that we’re doing as a company. . . . As I really looked at 

the [NFT] technology, I realized what it allows you to do is reward your community.  And for 

somebody like me who’s trying to build the next Disney, what you need is a thriving community.  

And so we saw this as a tremendous way for our community to capture tremendous value from the 

things that we’re building.” 

 

C. “Now as we’re building out this IP, imagine that you could’ve gotten in on 

Disney when they were doing Steamboat Willie, and that’s how we think of the Legendary tier.  

That’s how we think of this whole first drop quite frankly.” 

 

7. Impact Theory also underscored that this purported value would be derived from 

the company’s efforts, and that Impact Theory would use the proceeds from the Offering for 

“development,” “bringing on more team,” and “creating more projects.”  For example, Impact 

Theory stated: 

 

A. “But yeah, I will make sure that we do something that by any reasonable 

standard, people got a crushing, hilarious amount of value.” 

 

B. “The key takeaway that I want you to have is that there is a lot of cool 

things coming in the next 18 to 24 months.  And that is ultimately a tiny fraction of the things that 

will be coming in the next five years.  The reason that we’re only selling on the next 18-to-24 

month hype is I want you guys to be able to capture 90 percent of the economic value of all the big 

things that we will do in the coming years beyond that.  And the only way to do that is to only sell 

and set the price based on the things that we’re doing in the short term, and that will leave the 

upside to be largely captured by you guys.” 



 4 

  

C. “We’re going to be investing that money into development, into bringing on 

more team, creating more projects, making sure that we’re delivering just an obscene amount of 

value.  Until people are giggling thinking that they can’t believe that they paid – you know – 

whichever tier they come in on and are getting all this value – until that’s the sentiment – we will 

just keep stocking it with value.” 

 

8. In addition, Impact Theory publicly shared its view that the fortunes of KeyNFT 

purchasers, Impact Theory, and Impact Theory’s founders were all linked together.  For example, 

Impact Theory stated: 

 

A. “Our goal is to make sure that as Impact Theory is enriched, as [its 

founders] are enriched, as our team here at Impact Theory is enriched, that you guys also are 

enriched.  And so that is why we are so aggressively behind NFTs.” 

 

B. “NFTs are the mechanism by which communities will be able to capture 

economic value from the growth of the company that they support.” 

 

9. Given these statements, numerous prospective and actual purchasers of KeyNFTs 

stated on Impact Theory’s Discord channels that they viewed KeyNFTs as investments into the 

company and understood Impact Theory’s statements to mean that the company’s development of 

its projects could translate to appreciation of the KeyNFTs’ value over time.  For example, 

prospective and actual purchasers stated: 

 

A. “This is like being offered to invest in a booming company when they’re 

Series A.” 

 

B. “Its like investing 10k with a 300k upside, for a small risk.” 

 

C. “Everyone here is an early adopter!  Buying a founders key is Like 

investing in Disney, Call of Duty, and YouTube all at once.” 

 

D. “[T]here is at this point in time no investment that has such an amazing Risk 

to Reward Ratio.  You are not investing in some key or PNG, you are investing in [the Impact 

Theory] team and regarding this is an opportunity that has never been there its like handing 20$ to 

Mark Zuckerberg in his dorm room.” 

 

10. In total, Impact Theory sold 13,921 KeyNFTs to at least hundreds of investors, 

including investors in multiple states.  In so doing, Impact Theory raised $29,896,237.16 worth of 

ETH, calculated based on the average of the open and close price of ETH in U.S. dollars on the 

day of each KeyNFT sale.  Impact Theory collected the proceeds from the KeyNFT sales in a 

single crypto asset wallet and used a portion of those proceeds to pay certain vendors providing 

services related to Impact Theory’s business. 

 



 5 

11. After the Offering commenced on October 13, 2021, the KeyNFTs also began 

trading on various secondary market crypto asset trading platforms.  Impact Theory stated on its 

websites and social media channels that KeyNFTs could be purchased and sold on two such 

secondary market platforms.  Impact Theory programmed the smart contract for the KeyNFTs so 

that the company received a 10% “royalty” on each secondary market sale.  Secondary market 

sales of KeyNFTs generated approximately $978,000 worth of ETH in royalties for Impact Theory 

between October 13, 2021 and July 20, 2023. 

 

Impact Theory’s Offer and Sale of Securities Was Not Registered 

 

12. Impact Theory’s offer and sale of KeyNFTs was not registered with the 

Commission, nor did Impact Theory’s offer and sale of KeyNFTs satisfy any exemption from 

registration. 

 

Violations 

 

13. As a result of the conduct described above, Impact Theory violated Section 5(a) of 

the Securities Act, which states that “[u]nless a registration statement is in effect as to a security, it 

shall be unlawful for any person, directly or indirectly—(1) to make use of any means or 

instruments of transportation or communication in interstate commerce or of the mails to sell such 

security through the use or medium of any prospectus or otherwise; or (2) to carry or cause to be 

carried through the mails or in interstate commerce, by any means or instruments of transportation, 

any such security for the purpose of sale or for delivery after sale.” 

 

14. Also as a result of the conduct described above, Impact Theory violated Section 

5(c) of the Securities Act, which states in relevant part that “[i]t shall be unlawful for any person, 

directly or indirectly, to make use of any means or instruments of transportation or communication 

in interstate commerce or of the mails to offer to sell or offer to buy through the use or medium of 

any prospectus or otherwise any security, unless a registration statement has been filed as to such 

security.” 

 

Disgorgement and Civil Penalties 

 

15. The disgorgement and prejudgment interest ordered in Section IV, paragraph D is 

consistent with equitable principles, does not exceed Respondent’s net profits from its violations, 

and will be distributed to harmed investors to the extent feasible.  The Commission will hold 

funds paid pursuant to Section IV, paragraph D in an account at the United States Treasury 

pending distribution.  Upon approval of the distribution final accounting by the Commission, any 

amounts remaining that are infeasible to return to investors, and any amounts returned to the 

Commission in the future that are infeasible to return to investors, may be transferred to the 

general fund of the United States Treasury, subject to Section 21F(g)(3) of the Securities 

Exchange Act of 1934. 

 



 6 

Impact Theory’s Remedial Efforts 

 

16. In determining to accept the Offer, the Commission considered remedial acts 

undertaken by Respondent.  Specifically, Impact Theory instituted repurchase programs in 

December 2021 and August 2022, whereby the company offered to buy back KeyNFTs purchased 

in the Offering or on the secondary market.  In total, Impact Theory repurchased 2,936 KeyNFTs, 

returning approximately $7.7 million worth of ETH to investors. 

 

Undertakings 

 

17. Respondent has undertaken to: 

 

A. Destroy all KeyNFTs in its possession or control within 10 days of the date 

of this Order. 

 

B. Publish notice of this Order on Impact Theory’s websites and social media 

channels, in a form not unacceptable to the Commission staff, within 10 days of the date of the 

Order. 

 

C. Revise the smart contract(s) or any other programming code(s) or computer 

protocol(s) underlying the KeyNFTs to eliminate any royalty that Impact Theory might otherwise 

receive from any future secondary market transactions in KeyNFTs, within 10 days of the date of 

this Order. 

 

D. Certify, in writing, compliance with the undertakings set forth above.  The 

certification shall identify the undertakings, provide written evidence of compliance in the form of 

a narrative, and be supported by exhibits sufficient to demonstrate compliance.  The 

Commission staff may make reasonable requests for further evidence of compliance, and 

Respondent agrees to provide such evidence.  The certification and supporting material shall be 

submitted to Judith A. Weinstock, Assistant Regional Director, Division of Enforcement, with a 

copy to the Office of Chief Counsel of the Enforcement Division, no later than sixty (60) days 

from the date of the completion of the undertakings. 

 

E. Assist the Commission staff in the administration of a distribution plan, 

including any and all efforts to distribute to affected investors the monetary relief described in 

Section IV, paragraph D below, including, without limitation, promptly publishing on Impact 

Theory’s websites and social media channels, upon request by the Commission staff, notice of a 

distribution and/or claims process, in a form not unacceptable to the Commission staff.  

 

F. Respondent may apply to the Commission staff for an extension of the 

deadlines set forth above before their expiration and, upon a showing of good cause by 

Respondent, the Commission staff may, in its sole discretion, grant such extensions for whatever 

time period it deems appropriate.    

 



 7 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Respondent Impact Theory’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

 

 A. Pursuant to Section 8A of the Securities Act, Respondent Impact Theory cease and 

desist from committing or causing any violations and any future violations of Sections 5(a) and 5(c) 

of the Securities Act. 

 

 B. Respondent shall comply with the undertakings enumerated in paragraph 17 above.  

 

C. Respondent shall, within 15 days of the entry of this Order, pay disgorgement of 

$5,120,718.27, prejudgment interest of $483,195.90, and a civil money penalty of $500,000 to the 

Securities and Exchange Commission.  If timely payment of disgorgement and prejudgment 

interest is not made, additional interest shall accrue pursuant to SEC Rule of Practice 600.  If 

timely payment of the civil money penalty is not made, additional interest shall accrue pursuant to 

31 U.S.C. § 3717. 

 

D. Payment must be made in one of the following ways: 

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request; 

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to: 

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 

Impact Theory as a Respondent in these proceedings, and the file number of these proceedings; a 

copy of the cover letter and check or money order must be sent to Sheldon L. Pollock, Associate 

Regional Director, Division of Enforcement, Securities and Exchange Commission, New York 

Regional Office, 100 Pearl Street, Suite 20-100, New York, NY 10004-2616. 

 

http://www.sec.gov/about/offices/ofm.htm


 8 

 E. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is created 

for the disgorgement, prejudgment interest, and civil money penalties referenced in paragraph D 

above.  Amounts ordered to be paid as civil money penalties pursuant to this Order shall be treated 

as penalties paid to the government for all purposes, including all tax purposes.  To preserve the 

deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, it shall 

not argue that it is entitled to, nor shall it benefit by, offset or reduction of any award of 

compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in 

this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a Penalty 

Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting the 

Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty 

Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed an 

additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed 

in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a private 

damages action brought against Respondent by or on behalf of one or more investors based on 

substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

Secretary