Hester Peirce Slams SEC for 'Misguided and Overreaching' Cases in Flyfish Club NFT Dissent

SEC Commissioners Hester Peirce and Mark Uyeda recently criticized the U.S. Securities and Exchange Commission's handling of the Flyfish Club NFT case, calling it "misguided and overreaching." The case involved Flyfish Club, LLC, a high-end restaurant chain that sold NFTs in 2021 and 2022, offering exclusive membership access to its upcoming restaurant in New York. Backed by entrepreneur Gary Vaynerchuk, the project raised $14.8 million through the sale of about 3,000 NFTs, with some fetching prices as high as $14,300.

In a settlement, Flyfish Club agreed to pay a $750,000 civil penalty, destroy remaining NFTs, and cease collecting royalties from secondary market sales. The SEC’s ruling did not accuse the club of fraud but rather focused on the failure to register the NFTs as securities. The commission cited potential profit from purchasing the NFTs as a basis for its decision.

Peirce and Uyeda argued that the SEC's approach was harmful not only in this case but as a precedent for future NFT-related actions. They expressed concern that the SEC’s aggressive enforcement of NFT regulation might stifle innovation and create legal uncertainty for similar projects.

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