Yuga Labs Inc., the company behind the well-known Bored Ape Yacht Club collection of NFTs, is being investigated by the US Securities and Exchange Commission to see whether sales of its digital assets are in violation of the law.

This is happening currently as the state of NFTs is not good; values are falling, frauds and hacks are becoming more common, and as a result, many are beginning to doubt their long-term viability.

US SEC is now looking into the artist of the most well-known NFT artwork on the internet, dealing another blow to blockchain-based digital currencies.

According to reports, SEC is investigating whether any of Yuga’s NFTs should be classified as securities or not. If that is the case, then the NFTs will be covered by federal securities laws and subject to the same disclosure requirements as stocks. Since March, these inquiries have been ongoing.

In addition to keeping an eye on Bored Ape Yacht Club, Sec is also keeping track of other NFT developers and looking into cryptocurrency exchanges. The distribution of ApeCoins to the owners of Bored Ape Yacht Club (BAYC), Bored Ape Kennel Club, and Mutant Ape Yacht Club is supposedly another matter under investigation by the SEC.

Yuga Labs’ cooperation with the SEC’s investigation was confirmed by a spokeswoman for the company.

It is common knowledge that regulators and policymakers have a keen interest in learning more about the innovative realm of Web3. To define and sculpt the developing ecosystem, we intend to collaborate with other stakeholders in the sector and with regulators. As a pioneer in the field, Yuga is dedicated to providing full cooperation with all queries, the spokeswoman stated.