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They Were ‘The Next Disney’ But Instead They’re Paying the Largest Fine of Its Kind

It was the next Disney but now its paying millions in fines
Credit: D23

What new company wouldn’t want to look into the future and see itself as the next Walt Disney Company? After all, Disney has weathered 100 years of changes in entertainment and consumer focus to remain one of the largest entertainment companies in the world. But like all companies, Disney has a humble origin story with Walt and his brother, Roy, at the helm of a small animation studio.

Impact Theory LLC saw that origin story and decided it would be the next Disney. When Walt and Roy started Disney Studios in 1923, they worked in an experimental industry that allowed them to take chances on new technologies and stories. Impact Theory billed itself as the “next Disney,” but its chosen business was NFTs, and like Disney, they were planning on dominating the market.

Walt Disney

Founder of the Walt Disney Company, Walt Disney / Credit: Disney

What is an NFT?

An NFT is a non-fungible token. That definition does very little actually to explain what they are. Non-fungible means that they cannot be replicated; it is unique. Again, that does very little to explain what they are, but that is also a large part of the story of Impact Theory.

In the truest sense, an NFT is a digital “work” of some kind that can be sold at an NFT marketplace. It can be a piece of art from anyone from Banksy to your five-year-old. It can be a famous tweet (one sold for $3 million). For the most part, an NFT can be anything someone would be willing to buy at that marketplace.

About two years ago, people online began figuring out that they could make money by selling or buying NFTs, hoping the value would continue to rise. But this summer, the NFT market crashed as people realized that they were paying for something only natural in the online world, so not actually real at all. Unlike a piece of art you could hang on your wall, you could only keep NFTs in the digital world. 

Steamboat Willie

Credit: D23

What Happened to Impact Theory?

Impact Theory created what they called “Founder Keys” to raise money. They came in three tiers: Legendary, Heroic, and Relentless. These were marketed as NFTs that would go up in value and as a piece of the company. Impact Theory made $29.9 million off the sales and another $978,000 in royalties from secondary sales.

In its marketing, the company billed itself as the “next Disney” while showing investors clips from Walt Disney’s 1928 short Steamboat Willie, which introduced the world to Mickey Mouse. Impact Theory said that buying its “Founder Keys” was like buying stock in Disney a week before Steamboat Willie hit theaters.

Until then, the company had done nothing illegal, as very few laws can be applied to NFTs. However, failing to register with the U.S. Securities and Exchanges Commission (SEC) before seeking investors was illegal.

Impact Theory will pay a $500,000 fine, give up $5.6 million, including interest, to the SEC, and destroy any “Founder Keys” in its possession. The payout of over $6.1 million is the first for any company dealing in NFTs, but it still seems minuscule compared to the nearly $30 million the company raised.

Walt Disney Emmys

Walt Disney with two Emmy Awards. Credit: D23

Related: Walt Disney’s Housekeeper Died With An Amazing Secret

The SEC does not usually impose fines or make a settlement with companies that sell assets. But because Impact Theory made claims customers that would be on the ground floor of an emerging industry and could potentially make millions, they had no choice.

Impact Theory said they were pleased with the settlement but disappointed the SEC viewed them through a security lens. However, the payment will keep them out of court.

In this new world, customers should be aware of what they buy and how drastically that world has changed in recent years. There is always the possibility of losses, especially if the customer doesn’t understand what they’re buying.

And always remember there is only one Walt Disney, and no one else can take credit for his accomplishments.

We will continue to update this news at Disney Fanatic.

About Rick

Rick is an avid Disney fan. He first went to Disney World in 1986 with his parents and has been hooked ever since. Rick is married to another Disney fan and is in the process of turning his two children into fans as well. When he is not creating new Disney adventures, he loves to watch the New York Yankees and hang out with his dog, Buster. In the fall, you will catch him cheering for his beloved NY Giants.

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