- Australian web3 gaming pioneer, Immutable, has received a Wells notice from the US SEC alleging non-specific breaches of US securities law.
- Immutable claims the Wells notice was intentionally issued just before the US election, suggesting the SEC has sought to issue many such notices to other crypto firms prior to the election.
- The company said it would fight any legal action and has called for the SEC to take a new approach to its regulation of the crypto industry.
Stone the flamin’ crows! The long arm of SEC enforcement has reached down under!
Aussie web3 gaming pioneer, Immutable, is the latest in a long line of crypto companies to be slapped with a Wells notice by the US Securities and Exchange Commission (SEC). For those who may not know, a Wells notice is a formal notice issued by the SEC informing the recipient that the regulator has completed an investigation and is now planning to bring enforcement action against them.
Immutable revealed it had received the notice in a statement on its website published last Friday, stating that the notice came just hours after the firm’s first interaction with the regulator. Immutable also suggested that the notice, along with many others which have been delivered to other web3 firms recently, was fast tracked to be delivered before the US presidential election which takes place this Tuesday US time.
This sudden Wells notice arrived shortly before the U.S. election. It does not take an astute observer to connect the timing.
Immutable company statementDespite now facing the looming threat of legal action from the SEC and US Department of Justice, Immutable said it will continue to “fight for builders, creators, gamers, and digital ownership”, and it intends to “keep building”. The company is behind popular blockchain-based games Gods Unchained and Guild of Guardians.
We have been building Immutable since 2018. We are not here to play short-term games: Immutable remains well capitalized with a large war-chest to build for the future of gaming. SEC overreach and political calendars won’t stop us; they won’t stop the industry; they won’t stop the inevitability of digital property rights.
Immutable company statementAt the time of writing Immutable’s token, IMX, was sitting at US$1.09 according to CoinGecko, down over 18% from where it sat prior to the announcement of the Wells notice.
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Hit Me with The Deets! Sorry, No Deets…Lolz
Immutable said the Wells notice accuses the company of numerous non-specific breaches of US securities laws, but provided virtually no detail of the alleged wrongdoing:
The notice simply cited statutory provisions and contained limited meaningful detail about the nature of the investigation – we counted fewer than 20 words of material explanation.
Immutable company statementImmutable said the SEC revealed in a short phone call after issuing the notice that the breaches relate to the company’s 2021 private sale of its IMX token:
“In a ten minute call after they had already issued us with a Wells notice, the SEC alleged a 2021 blog post stating a pre-launch investment made in the IMX token at a price of $0.10 ($10 pre 100:1 split) was inaccurate, and implied there was no exchange of value between the parties.
Immutable company statement
The SEC is simply wrong about this accusation, according to Immutable — something it says the regulator would have realised had it engaged in a “constructive dialogue” with them during the course of its investigation.
Unfortunately (and unusually), the regulator hadn’t spoken to anyone at Immutable prior to issuing the Wells notice. The company said it received the Wells notice just hours after its first ever contact with the regulator:
Prior to the issuance of a Wells notice, there are often multiple months of interviews and conversations between company counsel and the SEC, so the SEC can fully understand the situation. Instead, in our very first interaction with the SEC, we were told a Wells notice would be issued to the company within the week. We then received it within hours.
Immutable company statementImmutable now joins the likes of Ripple, Consensys, OpenSea, Coinbase and Crypto.com in receiving Wells notices, many of which have come in the past 2 months.
Immutable Vows to Fight, Criticises SEC Approach
Like the many other web3 companies who’ve received Wells notices from the SEC recently, Immutable has vowed to fight. The company also took the chance to highlight criticism of the SEC’s approach by one of its own, quoting SEC Commissioner Hester Peirce, who has previously said that “leaving crypto to be addressed in an endless series of misguided and overreaching cases has been and continues to be a consequential mistake.”
Immutable says it is all for clear and thoughtful regulation of the industry, saying “we welcome regulation that is fair and well thought-out, and we have been actively engaged in industry forums to drive these outcomes.”
Related: Ripple Prepares for Prolonged Legal Fight as SEC Requests Extension to January 2025
As for where it thinks the regulator should go from here, Immutable echoes the thoughts of many many other web3 companies that have tangled with the SEC over the past few years:
The way forward for the SEC to engage with crypto is clear. It has been repeated by companies, lawyers, and internal dissenting commissioners for the last four years. Engage with the industry. Create clear and fit-for-purpose industry rules and regulatory guidelines, and we will follow them. Use fair process, and we will adhere to it. At the absolute minimum, have a real conversation before firing from the hip.
Immutable company statement
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