The post SEC Serves NFT Project CyberKongz With Wells Notice Citing Securities Violations appeared on BitcoinEthereumNews.com.

The U.S. Securities and Exchange Commission has issued a Wells Notice to NFT gaming project CyberKongz, marking the latest regulatory probe into an entity of its type. “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,” the project said in a statement posted to X on Monday. A Wells Notice informs recipients that the regulator is thinking of undertaking enforcement actions based on what it discovers from preliminary investigations. Once served, the notice typically gives recipients 30 days to respond before the SEC decides whether to pursue it. A full-blown investigation and subsequent charges against CyberKongz could present “major implications” for the blockchain gaming industry, it said, adding it would “defend against this stance for the wider space.” In particular, projects combining NFTs with utility tokens could be affected. CyberKongz, which operates without venture funding or significant treasury reserves, said it plans to challenge the notice. “We have been suffering in silence for the last two years, ever since we first received contact from the SEC,” CyberKongz said, alleging the regulator has “a complete lack of understanding of blockchain technologies,” which has resulted in “unjust accusations and information inaccuracies.” CyberKongz and the SEC did not immediately respond to Decrypt’s requests for comment. The SEC’s concern is centered on the NFT project’s April 2021 Genesis Kongz contract migration, which regulators interpreted as a token sale, according to the company’s statement. CyberKongz maintains this was purely a technical upgrade rather than a securities offering. “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?” the project said. As a gaming platform, CyberKongz provides users…

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Filed under: News - @ December 18, 2024 3:22 pm