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?”
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