CyberKongz NFT Collection Hit with SEC Wells Notice
CyberKongz criticized the SEC's "perplexing" view of smart contracts, arguing it misinterpreted a contract migration as a sale.
NFT collection CyberKongz announced late Monday that the SEC issued a Wells notice , signaling its intent to charge the project. This notice means the regulator believes there might be securities law violations and is preparing to take enforcement action against CyberKongz.
“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,” the project said in an X post.
“We have been suffering in silence for the last two years, ever since we first received contact from the SEC,” it added. “Throughout the entire process they have showcased a complete lack of understanding of blockchain technologies that has resulted in unjust accusations and information inaccuracies.”
CyberKongz Genesis Collection Sparked the PFP NFT Boom
In March 2021, artist Myoo launched the CyberKongz project with 1,000 unique, randomly generated NFTs known as the Genesis Collection. Myoo designed these 34×34 pixelated gorilla images specifically as profile pictures (PFPs).
At the time, using NFTs as PFPs was still a novel concept. However, CyberKongz quickly gained traction for its innovative approach. Setting the initial mint price at just 0.01 ETH also made the collection affordable, boosting its early success.
CyberKongz Slams SEC Over Misunderstanding of NFT Contract Migration
The project claimed the SEC has presented a “perplexing interpretation of smart contracts.” It pointed out that one of the SEC’s key concerns—the ‘sale’ of Genesis Kongz in April 2021—was actually a contract migration. The team questioned how a clear regulatory path can exist if the SEC cannot distinguish between a primary sale and a contract migration.
“It has become increasingly apparent that the current administration is trying to force their anti-crypto agenda at the last minute,” it said. “We hope that the new administration puts an end to this unjustness on our industry, but until then we will fight for NFT projects on all chains.”
The crypto industry has repeatedly criticized the SEC for relying on “regulation by enforcement” instead of providing clear rules. The SEC’s use of the Howey Test to classify NFTs as securities remains especially controversial. Many in the industry argue this approach is unclear and overly punitive.
Earlier this year, the SEC issued a Wells Notice to OpenSea , the largest NFT marketplace, claiming some NFTs on the platform might qualify as securities under US law. OpenSea’s leadership quickly pushed back, framing its resistance as a defense of creative freedom in digital art.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
What Are The Key Support And Resistance Levels For Ripple (XRP) During The Market Decline? Analysis Company Reveals
Cryptocurrency analytics firm MakroVision has taken a look at the XRP price situation during the market decline.
In this Altcoin, Developers Say “There is Manipulation Because We Allocate Too Few Tokens to Ourselves”, Demand More Tokens from the Community
Developers in one altcoin project attributed price volatility and manipulation to the fact that they had too few tokens.
400 Million XRP Worth $1.13 Billion Unlocked: But There’s One Thing to Know
Although 400 million XRP have been unlocked, according to Onchain data, this is a planned unlock and most coins will not be sold.
Are the Applications of ETF Applicants DOGE, XRP, SOL, LTC, BONK, MELANIA Altcoins Likely to be Approved? CEO Evaluated
Is there a possibility that the ETF steps that have been put forward recently for various cryptocurrencies, including memecoins, will come true?