SEC Drops Yuga Labs Probe: NFTs Not Securities

The US Securities and Exchange Commission (SEC) has concluded its investigation into Yuga Labs, the company behind the Bored Ape Yacht Club (BAYC) and CyberPunks NFT collections, without filing any charges. The regulator's decision to close the case without further enforcement actions was hailed as a victory for NFT creators and the industry at large.

Yuga Labs, in a social media post on March 3, welcomed the closure of the investigation, stating, "After 3+ years, the SEC has officially closed its investigation into Yuga Labs. This is a huge win for NFTs and all creators pushing our ecosystem forward. NFTs are not securities."

The SEC launched its probe into Yuga Labs in October 2022, examining whether certain NFTs could be classified as securities under federal law. The agency scrutinized the company's marketing of BAYC and related assets, as well as the sale of ApeCoin (APE), a crypto associated with the BAYC ecosystem, to determine if they fell under securities regulations.

The SEC's decision to close the case without charges provides some clarity for NFT creators and marketplaces, though broader questions about the classification of digital assets remain unresolved. The move comes amid a wave of SEC case closures in the crypto sector under new leadership appointed by the Trump administration.

In recent days, the agency has also dropped investigations into Robinhood, Gemini, Uniswap Labs, Consensys, and OpenSea. Meanwhile, the SEC has settled lawsuits with Coinbase and Kraken and is reportedly moving toward a resolution with TRON founder Justin Sun.

This regulatory shift follows years of scrutiny from the SEC, which had argued that many crypto assets, including certain NFTs, met the definition of securities under the Howey Test, a legal standard used to determine whether an asset falls under SEC jurisdiction. Industry leaders have pushed back against this classification, arguing that NFTs represent digital ownership rather than investment contracts.

Despite the SEC's recent case dismissals, its longstanding lawsuit against Ripple remains in active litigation.