The SEC Has Dropped Its Investigation into Yuga Labs, the Maker of Bored Ape Yacht Club NFTs

After 3+ years, the SEC has officially closed its investigation into Yuga Labs

The Securities and Exchange Commission (SEC) has concluded its investigation into Yuga Labs, marking the end of a probe into whether the company’s Bored Ape Yacht Club (BAYC) NFTs and ApeCoin infringed upon federal securities laws.

“After 3+ years, the SEC has officially closed its investigation into Yuga Labs,” the company announced via X post on March 3. “This is a huge win for NFTs and all creators pushing our ecosystem forward. NFTs are not securities.”

SEC ends Yuga Labs probe into BAYC NFTs and ApeCoin after two years

In October 2022, the SEC initiated an investigation into Yuga Labs to scrutinize its NFT offerings and the distribution of ApeCoin.

The SEC’s aim was to determine if these digital assets could be classified as securities under U.S. law, applying the Howey Test—a legal standard derived from a 1946 Supreme Court case.

The watchdog’s probe commenced under former Chair Gary Gensler as part of a broader investigation into NFTs. This included examining NFT creators and marketplaces to determine if certain types of NFTs, such as fractional NFTs, fell under securities regulations.

Founded in 2021, Yuga Labs rose to fame during the peak of the NFT bull market with some of the most expensive and sought-after NFT collections, including Bored Ape Yacht Club and Mutant Ape Yacht Club. It also acquired the rights to CryptoPunks, an early NFT collection that fetched enormous sums.

The NFT conglomerate reached a $4 billion valuation after securing $450 million in funding by 2022.

The firm’s BAYC collection generated billions in trading volume, making it a significant player in the NFT domain.

SEC reportedly drops several crypto investigations

The SEC’s decision to abandon its investigation into Yuga Labs coincides with the regulator’s increasingly flexible stance toward the crypto industry under the Biden administration.

Most recently, the regulator has dropped its investigation of several major crypto companies, including Robinhood, Gemini, UniSwap Labs, Consensys-owned MetaMask, and OpenSea. The SEC has also reached settlements with Coinbase and is reportedly on track to settle its case against TRON’s Justin Sun.

In its announcement that it is dropping its case against Coinbase, the SEC said its Cyber and Emerging Technologies Unit will weed out those that are looking to exploit innovation to harm investors, including through fraud related to blockchain technology and crypto assets.

The SEC has been reversing multiple crypto-related enforcement actions taken under former Chair Gensler, such as dropping a years-old lawsuit against Kraken on March 3.

However, the SEC’s longstanding lawsuit against Ripple remains in active litigation. President Donald Trump recently named XRP one of the coins included in his proposed Crypto Strategic Reserve, alongside Cardano, Solana, Bitcoin and Ethereum.

The price of ApeCoin, a token linked to the Bored Ape Yacht Club ecosystem, dropped 16% in the past 24 hours amid a broader market pullback.