The Wells Notice, issued by the SEC, is part of a recent surge in enforcement actions in the space. The SEC continues its approach of regulation by enforcement rather than issuing proper guidance for crypto assets. The industry will be closely watching how the courts will eventually rule on these important issues.

While the requested clarifications specifically relate to airdrops, these fundamental questions about the digital asset industry in general have been awaiting a response from the SEC for years. As many in the industry have continuously argued, the lack of clear guidance and a regulation-by-enforcement approach by the SEC has created uncertainty and hindered the growth and innovation within the industry.

In the last 20 or so years, there have only been a handful of enforcement actions specifically penalizing firms for a failure to file a 13F, particularly in cases where no other issues, such as fraud, were involved. The SEC has, however, continued to propose new regulations for investment managers on a regular basis, highlighting its clear priority on increasing transparency within the industry.
 
These enforcement actions serve as a reminder for firms to continuously review…

Although Commissioners Peirce and Uyeda point out in their dissent that the NFTs were intended to serve as "utility tokens" (you couldn't eat at the restaurant without one), the point underscores the importance for issuers to monitor communications and public statements closely. The SEC took clear issue here with the various statements made by the issuer regarding the expectation of profits from selling the NFTs, spending 4+ pages of the Order pointing out specific examples of these…