The NFT project CyberKongz posted on the X platform that it had received a Wells Notice from the U.S. Securities and Exchange Commission (SEC).
SEC Hits CyberKongz With a Wells Notice
The team said, “We have been silently enduring for the past two years since we first received contact from the SEC. Throughout the process, they showed a complete lack of understanding of blockchain technology, resulting in unfair accusations and inaccurate information.”
CyberKongz has received a Wells Notice from the SEC.
We are extremely disappointed at the approach the SEC has taken towards us, but we are going to stand up and fight for a brighter future that holds more clarity for NFT projects.
We have been suffering in silence for the last… pic.twitter.com/lc6hyzUPb0
— CyberKongz (@CyberKongz) December 16, 2024
The CyberKongz team further shared that even though the project is a project established in the gaming field, the SEC Enforcement Division is of the opninion that if the token (ERC-20) is not registered as a security, it cannot be combined with blockchain games. The project added this kind of rhetoric from the SEC will have a significant impact on the entire web3 gaming industry, and CyberKongz has vowed to oppose this position in a wider range of areas.
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Apart from this, the SEC has also shown a “perplexing interpretation of smart contracts”, alleges the NFT project . One of their major concerns with CyberKongz is around the ‘sale’ of Genesis Kongz in April 2021, which was actually a contract migration. CyberKongz has thus, called out the SEC’s inability to distinguish between ‘primary sale’ and a ‘contract migration’ .
The team also alleged that the current SEC regime is trying to push further their anti-crypto agenda at the last minute.
The team expressed gratitude to crypto executives who are relentlessly fighting for crypto, “We stand with @brian_armstrong, @dfinzer, @haydenzadams, and many others who are leading this fight for our industry.”
Wells Notice is a standard procedure in the regulatory world, and is a means to subject crypto firms to sanctions, penalties, or suspending certain operations altogether. In August, OpenSea, the leading NFT marketplace, too, had received a Wells Notice from the SEC. According to the CEO of OpenSea, Devin Finzer, the notice asserted that under existing federal law, the NFTs on OpenSea are securities and OpenSea was offering unregistered securities.
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