The U.S. Securities and Exchange Commission (SEC) recently sent a Wells notice to CyberKongz, indicating the regulator plans to take enforcement action against the non-fungible token (NFT) project.
CyberKongz announced the notice this week and says it plans to “stand up and fight” in response to the SEC’s crackdown.
-->“We have been suffering in silence for the last two years, ever since we first received contact from the SEC. 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 is a project deep-rooted in gaming and the SEC’s Division of Enforcement have approached us with very concerning rhetoric that you can not have a token (ERC-20) in tandem with a blockchain game without registering it as a security. This discourse would have major implications for the entire web3 gaming industry, and we will defend against this stance for the wider space.”
The SEC also sent a Wells notice to the NFT marketplace OpenSea in August, claiming that NFTs on the platform are securities.
CyberKongz also says the regulator’s Wells notice “demonstrated a perplexing interpretation of smart contracts.”
“One of their major concerns with CyberKongz is around the ‘sale’ of Genesis Kongz in April 2021, which was actually a contract migration. 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?”
