The U.S. Securities and Exchange Commission, which has taken a tough line toward cryptocurrency projects under Chairman Gary Gensler, is probing NFT creators and marketplaces for regulatory violations, according to a Bloomberg report that cites anonymous sources familiar with the investigation.
Per the report, the probe is looking into whether NFTs “are being utilized to raise money like traditional securities.” The SEC has reported sent subpoenas related to the investigation and is particularly interested in information about fractional NFTs, which allow multiple people to hold (and trade) a share of an asset.
NFTs, blockchain-based tokens that denote the right to sell or trade an accompanying asset such as a digital collectible or artwork, are a major sub-sector of the crypto economy. One of the top Ethereum marketplaces, OpenSea, has registered over $3.6 billion in trading volume in the past month, per DappRadar. The popularity of non-fungible tokens has attracted Ethereum competitors such as Solana and Binance Smart Chain.