Yuga Labs Inc., the creator of the Bored Ape Yacht Club collection of non-fungible tokens, is under an investigation by the U.S. Securities and Exchange Commission, Bloomberg reports.
The aim of the probe is to determine whether or not the company violates federal securities laws with some of its offerings.
A person familiar with the investigation claims that the SEC might view some of Yuga Labs's' NFTs as stocks.
The probe will also be focused on the Ape Coin (APE), which might be an unregistered security. The Ethereum-based governance token was launched in March. The majority of the token's supply (62%) was allocated to the community. The rest of the tokens went to Yuga Labs, launch contributors, BAYC founders as well as charitable causes.
The APE price is down as much as 9% on the news, according to data provided by CoinMarketCap. The cryptocurrency is currently valued at $1.4 billion.
The report says that it is not clear whether the regulator will take Yuga Labs at this point in the investigation. The company hasn't been accused of wrongdoing just yet. The company claims that it is "committed" to cooperating with the regulators.
Apart from Bored Ape Yacht Club, Yuga Labs controls such prominent NFT collections as Meebits and CryptoPunks.
The company's valuation reached $4 billion back in March after securing a whopping $450 million in funding.