CyberKongz faces Wells notice from SEC over ERC-20 tokens
CyberKongz, an NFT gaming project, revealed on December 16 that it received a Wells Notice from the U.S. Securities and Exchange Commission (SEC).
The notice scrutinises the platform's integration of its ERC-20 tokens with blockchain games and questions its 2021 contract migration.
“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,” said CyberKongz team, expressing frustration over the SEC’s actions.
They emphasised that this regulatory scrutiny, which began two years ago, has been a significant burden.
Central to the SEC’s concerns is whether ERC-20 tokens can be used within blockchain games without being classified as securities.
CyberKongz argued that this could set a precedent with major implications for the Web3 gaming sector.
A key issue also involves the Genesis Kongz contract migration in April 2021, which the SEC reportedly interpreted as a token sale.
“If they cannot distinguish between a primary sale and a contract migration, what hope do we currently have for a clear regulatory pathway going forward?” stated CyberKongz disputing this interpretation.
The Wells Notice provides the project 30 days to respond before the SEC determines whether to proceed with enforcement.
While not an outright accusation of wrongdoing, it signals potential legal action.
CyberKongz joins a growing list of blockchain and NFT entities facing similar scrutiny from the SEC, including Coinbase, Ripple (CRYPTO:XRP), and Uniswap Labs.
Australian gaming company Immutable also recently reported receiving a Wells Notice, citing vague allegations and unclear guidelines.
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.
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